This Nifty Setup Was Too Good to Ignore! | Monthly Option Selling!

A good business is all about identifying a right opportunity and acting on that right opportunity. If you have identified the opportunity well and made a good action, definitely you will make money. And ability to identify this right opportunity comes from experience and from analysis. Options trading is also a business and if you know how to identify a right opportunity at right time in the market, more or less always market will reward you. So, all these option trades, whatever we are showing you, basically prepare you to start identifying right opportunities in the market. Do not take any kind of a risk even if the identified opportunity goes wrong, there should not be a loss. Welcome to another video by The Option School. This is your friend Pradeep Singla. In this channel, we talk about hedge safe option trading strategies which are able to generate good profits for all of us. You can join our YouTube WhatsApp community. Link is given in the description. We give you a pre-market report every day morning. Under the same process, let me take you once again to April 1st and let us see what a different kind of opportunities can be identified. Now, if I see April, VIX was quite good. It was not bad. Although obviously high VIX also means that okay, market can be volatile. I go to 28th April expiry and I try to find out what can be done. In this trade, what I'm trying to do, you see it very very carefully. So, what I will do, I will buy 24,000 call. Simply, I will buy this 24,000 call and this call is costing me 215 rupees. I know I have funds. I will go pretty far away from this. I will sell 24,800 call. I will sell this. Now, my maximum loss you can say is 9,000 rupees, but my maximum profit can be 42,000 rupees. But in this case, if market goes down, it will not be a profit. So, what I'm going to do here is I am selling more than one call. I am going to sell, let's say, two calls. Then also there is a little bit of loss on the downside. Net credit is still less. I am selling three calls. Now the net credit in the trade is 214 rupees. I have purchased one call of 215 rupees. And I have sold three calls of 70 rupees each. So 70 + 70 + 70 is around 210. I am going to sell another call. So this becomes my trade. This trade is requiring 2.53 lakh rupees. This trade is safe up to 25089. Market right now is 22929. Almost 23,000. So this trade has a safety of 2,000 points on upside. And this trade has complete safety on downside. If market really goes down, I am not at all bothered. I am definitely going to make 4374, which will be around 1.5% of whatever margin I am using. I can definitely reduce margin by buying some weekly calls. I'll show you. Now suppose I go to 7th April expiry. I know my upper break even point is around 25,089. So I will go and buy cheapest possible options, maybe 25,100. I will buy this. See what happens to my margin requirement. So I have purchased one call. I have sold four calls. I will buy three calls of this. So that number of buying and number of selling are reduced. Now if you see it is asking for 1. 91 lakh rupees. And if I change the payoff diagram from 7th April to 20th April, you will see the right payoff. Upside risk is largely reduced. Still there is no risk on the downside, right? And I am able to reduce margin also. As of now I'm saying for practical purposes, let us say I'm not going. I am using full margin. I am using 2.53 lakh rupees for this trade, thinking that I should make some 2 to 3% profit. I am not buying any hedging. Now this all analysis you should be able to do on the first day when you are entering the trade. Now if I have 2.53 lakhs or maybe 2.6 lakhs, only then I will be able to do this. Otherwise, by buying a weekly option, I will be able to do the trade in less than 2 lakh rupees and suddenly VIX goes up, I will be stuck up. So, always keep sufficient extra margin in your kitty and in this kind of a scenario when I'm not buying any put, I have given decent amount of margin to the market. This is the trade I will start with. Many of you will say maximum loss is identified but maximum loss is at 25089. My first adjustment should come if 24800 level where my selling is there, maybe that is the level at which I will do adjustment. If before that I'm getting some good profit, I am not required to do an adjustment. Let us see and if market goes downside, how we will increase the profit. We will not be satisfied with only 4300 rupees, we'll definitely increase this also. Suppose market is moving down, you can always shift these calls down. If I'm doing right now as of now, there is no movement. So, see the credit has increased to 5800 rupees. Now the credit has increased to 7000 rupees, 8000 rupees and even 10,000 rupees. 10,000 rupees on 2.74 lakh definitely is more than 3%. When I'm doing this, my upper break even point comes to 24853. So, I would start with a broader range and as and when market keeps on moving, I will shrink my range. That is the whole logic. I will say most of the successful option sellers follow. So, this is the trade I will start with, right? For better reach and visibility, I'll request all of you to please on the like button and subscribe to the channel. Your likes and subscriptions are very valuable to us. They act as a big motivation tool for us. Thanks in advance. Let's move forward and see what happens to this trade. Market has tanked down by almost 600-700 points. We are getting some profit in this trade. We are not worried at all about the downside market and still full month is there. So, we are not doing any adjustments also. Next day, okay, market has again come up. We are already making that 4089 rupees, whatever was equivalent to our credit. He said, "Okay, no issue." Next day, still good. Now, market has given a very big up move. So, one thing we must ensure that, okay, whenever we are making this kind of a trade, we should stay as far away from the market as possible. And all of you need to tell me what is this trade is. This is not butterfly. This is not iron condor. What is this trade? Please write it in the comment section. Now, we are making 3874, and we will be starting our adjustments somewhere close to the peak of this triangle. Next day, let us see what happens. Okay, nothing much. Next day, now we are making 7598, which is better than whatever credit we had taken. Because our buying is giving us lot of profit, right? Let us say, as of now, I am still holding on to the trade. I am not doing anything in the trade. Let me see some more days, because it's just 10th of April only. Trade is valid till 28th April. As of now, my adjustment point has not touched at all. Next day, okay, there is a fall. I am still making 9000 rupees. I am very happy with the trade. There is no issue at all. Next day, now it has entered this triangle. This is a critical point for me. Here, this market has already given me 10000 rupees. Although you see estimated margin, let me refresh it, is around 3.83 lakhs, which has increased. That is the whole point. Initially, we must keep some extra margin in our trade, because maybe weeks has increased or whatever has increased. Uh the margin requirement has definitely increased in this trade, right? So, as of now, I'm making 10000 rupees. I can square off this trade. With this margin also, I'm making 10 returns, which is more than 2.5%. But this is the point where I should be very, very careful. Start now thinking that, okay, middle of the month, I should be able to do some adjustment, so that if market falls from here, I'm making some money. If market goes up from here, I'm not losing much money, right? So, what I will do, I will square off this 24,000 call and I will go back and I'm squared off my 24,000 call in 468 and I am buying 24,200 call in 344. See what we have done. I'm showing you this trade with a single set only so that there is no confusion on whatever is happening. See what is the reason behind this? I have taken 468 rupees back, right? By selling this. And now for new hedge I have purchased in 344 rupees. So, 468 minus 34 4, already around 124 rupees credit I have increased in the trade. You can see it here also. Now my credit which was earlier 4,700 rupees is now 12,000 rupees. My break even point has still not shifted downside. That is the biggest thing we can do in these kind of trades, right? But still definitely on upside there is a risk which I'm okay with that because I will try to adjust my upside in case market start touching this 24,800 level where is my selling point, right? Let us move next and see what happens. Okay, nothing. Market has gone down. I'm making 12,000 rupees in this trade now and I can definitely book this trade or now this is the time where I can start adjusting my upside also. So, what I will do, I will go to again 28th expiry option chain. Try to see what can I buy. Let us say 25,100. I will buy this. I have purchased earlier one lot of 24,200. I have sold four lots of 24,800. So, three lots are extra. So, what I will do, I need to buy three lots of this, right? If I do this, now my upside risk is not unlimited. It has reduced to only 13,000 rupees. And on downside, definitely I'm going to make some 6,7000 rupees and if market moves up I'm going to make very good money. As of now, I'm making 12,600 rupees. If I had done this trade in multiple lots, definitely my profit would have been much better, right? Now, with this act, what has happened? The estimated margin has also reduced and it is showing me 7.3% which which may not be correct because in the middle of the month we have reduced our margin. Initially, we had to take a higher margin. So, whatever initial margin we have blocked for the trade, we should consider that as our capital for calculating the percentage profit. So, let us move now. We have reduced the risk drastically and still the break even is 25033. Next day, I'm making 12,000 rupees. Next day, again we are making the same kind of money, no issue at all. Now, we are making 13,969 rupees. Definitely, it is 22nd April, we are entering the last week. We must start thinking that, okay, can we secure of the trade? Can we get rid of this trade or can we increase our profit? So, what I can do, I can shift this 25,100, I can close this now and maybe I can bring it 50 points down by paying few rupees extra, just 4-5 rupees extra. What will happen? Now, it will reduce my loss on the upside in case there is a sudden up move in the market even now. See, now my upside risk is hardly 4,500 rupees. And what to do on again this 24,200 which has already given me some more profit, I should secure of this also. I'm showing you all these adjustments, you can simply secure of the trade also if you want. So, that 24,200 I will shift to 24,300. This increases my credit a bit. Right, I will secure of this in 359 rupees and I have purchased a new in 297 rupees. So, again I am adding 60-62 rupees to my credit. So, one or two adjustments, very simple adjustments, but in that case, I am just increasing the chances of profit for my trade. Although, this is the right time we should book this profit and there is no looking back. Had I done this trade in let us say four lots also, I would have made around 50,000 rupees. No looking back on that, but still just for showing you some adjustments, I'm showing you how you can make that trade more safe. Let us now move next day. Again, we are making that 13,000-14,000 rupees. Market has gone down, but still my profit has not reduced because we have done all these kinds of adjustments, which has almost locked our profit in that trade. All right, let us now go to expiry, Tuesday. I'm making 9,725. Although the market has really tanked down, I'm still making 9,000. Although it was ideal opportunity to book the profit when we were having a 10,000-12,000 rupees profit, but even this profit is not bad. So, we have identified the right opportunity. We have created a very good trade for that, and we have locked our profit. How to lock profit in our other monthly setups is also shown in our courses. We have three courses, Iron Condor, Iron Fly, Double Condor Spread. We have very clearly shown you entry, exit, and how how to lock your profit. So, instead of guesswork, let us work with full authority in these markets. If you want to enroll for any of these courses, feel free to contact us on the numbers given on the screen. In addition to that, we are giving you some more deeper knowledge in our membership videos. There is a silver membership, Toss Insights, and Toss Premium. If you're really a serious option trader, you can join these memberships and reap the benefits. I am leaving you with another interesting video. You will definitely like it. Do not forget to subscribe to the channel and like the video. See you in the next video. Thank you.