Once you master this simple strategy, trading becomes EASY | Real P&L

The system I'm going to discuss today is very easy to use. You can learn it today and implement it tomorrow. There are no adjustments in it. There is no chart analysis. There are no indicators. Sir, this strategy has generated a total of 28 to 29 trades in 2026. Only one week had a loss. We don't need to look at anything—whether the market is bullish, bearish, or has broken out, it makes no difference. Don't even look at the charts. There are only five directions in the option market. What is happening in this strategy? You are making money in four out of those five scenarios. Ratios are the only strategy that yields a profit even while being in a debit. Come on, Kundan, let’s move on to your P &L now. So sir, this is the backtest report from January 2026 to September 2026, until today. Out of a total of 29 trades, 28 trades are profitable. So despite that upper circuit, my strategy is still in an 11.5%to 12%profit by the end of this year. You should build a single system in such a way that it adapts. Correct, because you never know where it will change. What is your current portfolio amount? Sir, I manage around 3 CR total for my family, which is my—what has been your highest profit on a single trading day? I wouldn't call it a single trading day . I would call it a single trading month because I am not an intraday option seller. I am a positional option seller . So, I get a graph for the entire month . That was around 2022, my highest—when I look at it in terms of that capital, it was around 751,000; today, those numbers are bigger, but in terms of percentage, they are smaller. But at that time, it was about 8%for me in a single month. So that was a huge number for me. What is the highest loss on a single trading month and how did it make you feel? Okay. So, this happened in 2023; I mean, we were trading—I was trading around 1.8 CR , and I had to book a loss of around 5.5 lakhs in one day, so 2023 was very difficult for me; from March to June, Bank Nifty went straight up by 7000 points. For me, as a non-directional option seller, I struggle when such momentum occurs. So, in those three months, I had a drawdown of 6.5%to 7%. In the last year and a half, it is obvious. It is no secret to anyone what the state of the market is. I would like to know, how has this one and a half years been for you? Ever since we have been seeing this corrective phase in the market. My main reason for shifting from swing trading to options was also that in swing trading, you don't have control over your money. Whether money will be made is decided by the market. >> Correct. As a future trader, you also understand that if I am bullish, I don't know when the market will pick up momentum, but I have to stay in the trade. In the meantime, earnings keep happening there. But in option selling, you can control your things, like you can build only if it's bullish. You can build only if it's bearish. You can build only if it's sideways. The only thing to pay attention to there is that you should have a system for what your losses could be. What will be my max loss? What will be my hard SL? How far will I adjust? How far will I fight the market? Where will I accept that I have been defeated ? Many people are unable to do this. Especially in option selling. Whenever someone takes a position in option selling, let's say an Iron Fly or Iron Condor. Whenever they build any non-directional strategy, they see a credit there, thinking that overall, I still have this much premium left. Even if I am in a 3%loss. But I see a credit, so theta decay will eventually come, and they keep fighting the market, and in the end, when that 3 %loss becomes 6%, you don't even realize it and you have to cut it. So, the P&L I will show you now, which is for my one year, I was able to survive and make money only because I followed things in a systematic way: what my max loss, max profit, break-even , and average ROI would be, and at what point I would say, "No, if I have a loss of this much percent, I am done for the month," meaning I won't trade again. Right? Because when you have a loss, there is a strong urge to recover it today itself. To recover it within this very week. That's where revenge trading happens. You end up incurring even more losses. So, it's just a bit—I mean, it is more of a psychological game rather than the strategy part. Everyone knows the strategy, but how you keep your psychology calm, and your system is what keeps your psychology calm. If you trade a system that is highly volatile, then no matter how much of a saint you become, it won't work for you , so you must develop a system that keeps you calm. If I am option buying with ₹ 1 crore and I say that my psychology will remain under control, it simply won't. But on the other hand, if I am working with a system where profits come slowly and losses also occur slowly, then that can help me psychologically. Come on, Kundan, let us now move towards your P& L. I would like to know how this year has been for you. >> Sure sir, sure. I will go first with the portfolio part. So if you see, I have invested around ₹ 47 lakhs here. ₹ 47 lakhs is invested, and I have only two holdings. One is liquid bees and the second one is LT gilt bees. >> What are they? So basically, these are ETFs of G-Sec government security bonds . So these are non-volatile. At the end of the year, they will give you a fixed return of 6-7%. And the best part is that both these instruments you see on the screen are treated as a cash component. Meaning, if I trade by pledging these, the broker will not ask me to maintain an extra 50%margin. Whereas if I have invested in mutual funds or stocks that are volatile instruments, SEBI treats them as non-cash components. So, suppose I have mutual funds worth 20 lakhs. I got a margin of 18 lakhs on that, so to trade with those 18 lakhs, I would have to keep 18 lakhs in cash or cash equivalents. Here, the case is that if I have invested ₹ 47 lakhs in this, I can use 100%of the margin of around ₹ 43 lakhs received on the ₹ 47 lakhs without maintaining any cash or cash equivalents . >> Okay? So, this gives me an extra 6-7% return annually on my overall funds. So , that is one thing. Right? >> And G-Secs are government-backed security bonds. Which means their probability of default is zero. They are even more secure than an FD. You could say so. >> Right? Now, if I show you the funds, you can see that it shows a collateral of ₹ 43 lakhs here. And if I click on available cash, the available cash is just ₹ 4,32,000. So that means there are open positions and margins are being used. Yes, so 43 lakhs is your overall collateral margin . You need to keep ₹ 4 lakh. Meaning 10%of your overall capital for MTM settlement in case of any loss or even if you have an option buying position. If you are hedging, the broker asks you for hard cash, saying you must have hard cash. So for that, I have kept around 10 %, which is ₹ 4,30,000, in cash. Now, if I talk about the P&L of this. Okay? So, this is the P&L from 1st December 2023, okay. I showed off-screen that before that, there were zero trades in this account, okay. And till today, we are shooting on October 1st, so it is a P&L of almost 10 months. Uh, I started this . Initially, when I started, for the first four months, I traded with ₹ 10 lakh, then ₹ 20 lakh, and then I made it ₹ 40 lakh. So overall, if we take an average of 40, then till date, it has made a profit of ₹ 8,59,777. It is a profit. Today's as well, that is net, yes that is net. I showed you off-screen that ₹ 79,000 is booked today . So if I look at today's P&L, it is close to around ₹ 9,40,000. So if I look at my overall 40 lakh, that is around 22-23%return. And that is what I target for a year. My target remains 20 to 25% , out of which I extract 6%from G-Secs. And 15 to 20%, meaning 18 to 20%, my system will give me. I will be more than happy because 6%came from my G-Secs. 18-20%my system gave me. My target of 25 %is hit. And that is more than enough for me. We have even exceeded that, and there are still two months left in the year. So this is how it has yielded for me this year. Kundan, your P&L is obviously impressive, but my perspective has always been this. There is more to a trader than their profit. There is no doubt that you are a professional trader and a good one, but we live in an environment where credibility is continuously challenged. >> And my question to the audience would be , if Kundan had come here with a -8 lakh portfolio, would he be a different person? >> The audience should... >> They should give this in the comments— whether a one-year or 10-month P&L defines someone or not, but a 10-month P &L reveals a lot about your trading system. >> True. >> And we have tried an exercise from our end in order to get into the mindset of a champion trader. >> Hmm. >> Like, how often are they trading, what kind of accuracy are they looking at? What is the overall experience using that system? So if you don't mind, I would like to share my working. So Kundan ji, the file you showed, we converted that PDF into Excel and ran a few basic operations. Just to get into the hard work behind the process. Because we don't want people to just see that, "Oh, he earned 8, 9, 10 lakhs."" We can also do this." Which would be no different from any other claim. >> Hmm. >> So first, let's come to the total here. This is the file that you sent. We can see here that up to row number 1674, we have...... >> data here. We will directly come to the summary. >> Right? >> So we will see that in this year, or in these 10 months, you have traded 1672 contracts. >> Right? >> It's not necessary that you traded it only once. It is possible that you traded that contract twice. Hmm. >> But if we assume that one order is going for one contract at a time, then even then you have a minimum of 1672 contracts. First of all, traders should understand right here that if an individual is taking 1000 or 2000 trades a year, then you also have an idea that the market can easily erode 5, 10, or 15%of your account per trade. So, to execute 1000 trades, what kind of planning or system building must have happened. This is what we are trying to figure out. That without a system, without an automated process... >> Hmm. ... >> no individual can press a button 2-3 thousand times a day. >> They can't. >> Because making decisions is a very exhausting task. >> There will be many errors. Now, out of these, we come to how many of your total 1672 contracts actually made you money? >> Right? >> So that comes out to be only 583 contracts. >> Only 583 contracts gave you money. So logically, the remaining 1089 contracts took money away from you. >> Yes. >> Giving you a win rate of 35%. >> Hmm. >> Which is reasonable. Because system accuracy is just one part of a system. >> So we have received information that the accuracy of this system is 35%. And since we are measuring in contracts... ...it means that if you are picking three contracts, then one of those contracts is making you money. The other two might be hedging you. >> Hmm. >> Which is being captured here. Hmm. >> Now we understand your win rate is a 35 %accuracy profile, far different from those who claim 90%, 80%, 70%. In fact, the audience who would have seen me on other platforms knows it. >> I have told them that top traders in the country usually get between 35%to 45% win rates. >> Because they are focused on overall safety. Why is that win rate coming in low? Because they are booking losses. >> Exactly. >> Timely booking. That booking is happening; immediate losses are being booked in the short term, which is why your win rate is dropping. If a person just holds the position, some of those losing positions would also turn out to be profitable. So, accuracy would go up , but the account would turn negative. When it came time to earn, each of your contracts gave you an average of ₹ 11,500. >> This is the average. Hmm. >> But when it came time to lose, they took an average of ₹ 5,000–₹ 5,500 from you. In other words, you were generating a risk-reward of >> A 2.15: 1 return-to-risk measure was forming on a per-trade basis. And your system's accuracy is at 35%. So , we already know the positive expectancy that is coming in here. Once we get a bit of an idea about your averages here. We move to the extreme ranges. >> Hmm. >> For an account of ₹ 40 or ₹ 45 lakhs, provisioning the 10%buffer you mentioned for MTM settlement. Assuming a 40-lakh account, on a per-trade basis, what is the maximum this person can gain? What is the maximum this person can lose? >> And why do we factor in this maximum? That is because your impulses are going to come out at the extreme points of your own graph. >> Yes. >> And whoever that individual is, they react at the extremes of their chart. For some, it will be 1 lakh; for others , it will be 1 crore. But a reaction is almost certain. >> Yes. >> So, let's focus on your extreme reaction points. This is a graph. When it comes to earning, it can go up to ₹ 13,000, but when it comes to losing, it goes up to ₹ 13,000. >> Hmm. >> Meaning, this is a graph with a slight right-side tilt. >> Hmm. >> Which we call skewness to the right-hand side. >> Hmm. >> A slight one, and this is captured by this ratio which I call the profit factor, which is the ratio of your maximum gainer to your maximum loser in absolute terms. >> And I believe that regardless of your win rate, regardless of anything, as long as a trader's biggest winner is larger than their biggest loser...Hmm. >> That trader is never out of the game. >> They can turn it around at any time and capture everything back. But this is extremely critical. Now let's talk about the mean. The mean means, on average, whenever you took a trade, how did your account experience it? So, here you have ₹ 500. That means if Kundan goes and presses the button, the account gains 500. >> Right? Right. >> A losing trader would have the exact opposite here, a negative. If they press the button, 500 goes out of the account . >> Okay. >> So here, if someone is gaining 500 every time they press the button, they will keep pressing it. >> Hmm. >> Which is why we see nearly 1,500 to 2,000 trades were made. And now it's time for the median. Hmm. >> So, the account felt that whenever this person presses the button, 500 comes into the account. But how did Kundan feel? >> Kundan experiences that whenever he presses the button, he loses ₹ 5,200. >> Right? >> So your experience is that I am not trading well, maybe I am generally losing money. >> But the account is experiencing a positive. Why is this happening? Because time to time, there is a big winner getting caught by the system. >> Yes. >> So, median means what is Kundan's experience of the system. He feels like he is losing ₹ 50. But whether you call it a mistake or whatever. Time to time, that person goes and captures a big winner which offsets it. >> And that is measured by your skewness. >> Hmm. >> So, if the skewness were zero, it would be called a perfect normal distribution curve. >> There is nothing unique in that. >> But when it starts shifting to the right side, it's a positive shift. It means there is effort being taken to capture bigger winners than losers. Only then will your right-side tail be longer. >> Hmm, so we can call skewness a sort of edge for your system. >> And when we see that an individual whose average earning is ₹ 500, but to earn that ₹ 500, they have to see a ₹ 1 lakh gain and also a 1 lakh loss. Only then do they get 500 per trade. So , it is not an easy trade. >> Yes. >> And this difficulty is captured in what is known as the coefficient of variation . This captures how easy it is to execute this trading system. Yeah. >> If its value starts to come below 10, it means that the trader had a smooth journey. >> Yeah. >> He didn't have much stress in earning. He enjoyed it. But if its value starts to go into triple digits, it means the trader must have earned, but his heart was in his mouth. >> Okay? >> So 30 means from time to time, the heart came into the mouth. >> True. >> It happened from time to time. Doubts came from time to time, but it went away because the value was still positive. >> So now in numbers, as you know, if your CV comes out negative, >> Yeah. >> We want a low CV, but if the CV is negative, you are a loss-making trader. If the CV is zero, you haven't traded at all. >> Yeah. >> If the CV is zero to five, you are at a fund manager level with that system. >> Meaning, in the current market scenario , your behavior is perfect. At five to 10, I would say you are at a confident level; the guy is walking around very proudly even at five to 10. >> What happens at 30? You are earning, but you are also intimidated. >> Yeah. >> Okay? At 1120, you are earning, but you feel like it might be gone tomorrow because the volatility of the account is quite huge. So when we capture this. Why do we capture this? We capture this in order to bring in ratios. As I said, you have earned 8 to 10 lakhs. They mean something to you. For someone else, they might not mean anything, and for someone else, it is a life-changing value. >> Correct. But to compare, we need ratios . So how did we determine the ratio? If you look at this table column, column C , we measured risk-reward here. >> Now its formula is given down here. What we did is, for example, your average risk, meaning whenever you lost money, you gave 5500. >> Yeah. >> When this trade took 16,300 from you, it was three times your R. >> Yeah. >> That it took from you. Whereas when this trade took 8,000 from you, then that is 1.5 times your R, that it went 1.5 times your average risk. >> Correct. >> When your 1R is breached many times, that is when your CV comes out higher. >> Yeah. >> This means that the trader is settling into a position. >> The trader is finding ground. >> Yeah. >> And that settlement is not happening. Because he is technically learning something new. Settlement is happening. Because he is starting to adjust the quantities now. To get into the rhythm. Yeah. >> As you mentioned, you have been following this system for 10 months. It takes even longer than 10 months for a system to get into a rhythm. Which is the message that I would like to give to the traders. Because many times people say I did this at 9:00 or this at 9:15, and by 9:30, 5,000 rupees came in. Day is done. It might not be that simple. That is the message we are trying to communicate. So the attempt is to make it into a ratio. And why is that attempt made? Here you will see it has been accumulated. An aggregate has been taken . >> For example, here you will see that your aggregate is 161.62, meaning if you risked 1 rupee, then after 10 months, you received 160 rupees. >> You earned 160 times the risk that you have taken. Now that is the metric because the objective of trading is to maximize risk-adjusted returns. >> Yes. >> So, first, risk has to be defined. It has to be brought into a ratio, which we have done here, that when your ratio is one, your return is 160. >> So, whether your base is 5,000 or 50,000 , that confidence point you mentioned is a later matter. >> And why are we giving these metrics? Because we don't want our aspiring traders to come to Kundan only based on absolute value. Otherwise, it will be like my friend. >> Hmm. >> That my percentage was 30%. >> Correct? >> We want that person to compare himself or herself with these parameters. If they have only taken 100 trades, the question is, what would happen if they took 1,000? If their accuracy is 50%, you are achieving results even at 35%. If your skewness is coming out positive , what is theirs coming out as? If your coefficient of variation is close to 30 , what is theirs? If the user actively does this by just downloading their P&L and doing it in a few minutes. I believe they will get great insights into their own performance and then they can compare themselves with the traders who are coming on the show. Hmm. >> Why is it that they are coming? And how much of a gap is there so that they can come? We would love to have your performance details in our comment section. Now, once we have your aggregate risk, then just a line curve is formed, and as soon as a line curve is formed. This is how your return profile looks. This is the graph that is forming. >> Hmm. >> So we can see the volatility you are observing after the introduction of cash . >> This is your account volatility that has started to stabilize, as you mentioned that we have adjusted. This is that last one month. Yes. >> Here you can see the base forming around the 50 risk-reward level. >> This base is basically saying, we saw trial and error adjustments here. This is the month. After April, it must have been very smooth until April. Look at December, then there was a very good spike in March. After April, May, June, July, and even yes, July here. For three to four months, the returns remained flat to negative. Meaning we didn't lose much, but we weren't making any money either. Then after July, we scaled up a bit again, and how did it scale? My question now is... >> Scale as in profits, exactly. >> Yes, profits. >> And you scaled very well because you did it with 35%accuracy, whereas the industry standard is 80%. No, the 35%accuracy part comes in because my system is a non-directional to directional system. So, whenever we trade non-directionally , it involves four legs. Suppose I sold a straddle or an iron fly, or an iron condor; what happens then? We keep adjusting it. Right? So, there are four legs, so eventually two legs will always be in a loss. So, even if your iron condor or iron fly is 100%accurate overall—meaning all your weekly iron flies are profitable—on the metrics, you will only see 50%accuracy. >> Correct. >> Because in four legs, you are always booking two legs in a loss. >> So, that is something the audience might be a bit confused about. >> That's perfect. Absolutely. And the consequence of that is that the average risk drops. >> Hmm. >> So, even though you are picking up four lots each. You are taking a risk of 5000 . >> Yes. >> All adjusted. >> Completely adjusted, so when the average risk drops, and when you earned 150 times that average risk, since the risk itself had dropped, earning 150 times takes a little less time. >> Yes. >> But it makes your journey smooth, which you mentioned at the beginning of the show—that you want a smooth process, which is why you don't deploy certain strategies. We can see that decision-making right here. Hmm. >> Efforts have been made to reduce trading costs, specifically brokerage, by using the broker InCred Money. If you are an active trader who does short-term trading, I encourage you to check our link in the description. Your monthly trading cost in that case will be limited to ₹ 99. That will be a fixed cost. And if you use this link, your first month's brokerage will be absolutely zero. Anyways Kundan, I really enjoyed watching this. Now I want to understand your system. Can you propose or suggest a system based on your experience that they can work on later? >> Okay? >> But a hypothesis, a quant-based hypothesis that they can deploy in the market to theoretically try and get such results. >> Okay? >> Sahil sir, as I said, as a trader, you cannot put all your money into one system. As a trader, we also need to diversify across systems. But as you mentioned, suggest something that everyone can do. Whether they have a job or a business, anyone can do it, it's easy to use, and actually makes money. So, we will look at some such strategies. So, right now you are seeing on the screen. I have made more than 23 zero-adjustment strategies so far. So that is my Quora. The system we just saw is a different system that I execute through an algo. And that is a high-risk , high-reward algo of mine which is giving me decent returns. This is a different system that works without any adjustments. I mean, as an option seller, as a positional option seller, I would say that the biggest pain point today is adjustments. If the market goes up, move the call away; if it goes down, move the put away , and it keeps going up and down. And in the end, there are so many adjustments that you get ruined by charges and all of that. Unless you have a very proven result, which we saw, that there are adjustments but we are still making money. So the pain point, which is adjustments, is not for everyone. With so many adjustments, unless you have 4-5 years of experience, you won't be able to build a system that has an answer for every market scenario. So as a newbie, or if you are starting your option selling journey, you can start with zero-adjustment strategies. What is in this? There are no adjustments. Okay? All the strategies I have made have no adjustments and no chart analysis either. The system we are about to see has no adjustments. There is no chart analysis . There are no indicators. People often apply 50 types of fancy indicators. We won't use any indicators or any data analysis either. So you might wonder, Kundan, if you don't use anything, how will you trade? For that, we will discuss a rule-based system. From the start, we have talked about rule-specific and pattern-specific things. So, one benefit of a rule-based system, Sahil sir, is that you can backtest it, unlike discretionary trading where you might say "I'll trade if there is a breakout here." No rules can be formed for that. How big was the candle? How long was its shadow? How high was the closing? There are so many factors that come into play. But in a rule-based system, you take positions on this day at this time, and if you do that for a whole year, what is the overall result? So you create such permutations and combinations and backtest them. When the backtest results look good to you. Then you gradually forward test it with one or two lots. Then you check if your backtest result matches your forward test result or not . Once it matches, then you gradually scale it up to five or ten lots. Right? So the system I am going to discuss today is exactly this. It is very easy to use. You learn it today and can implement it tomorrow because there is no rocket science in it. It is going to be very simple. Right? Among so many strategies, the one we will discuss today is the Bullish Butterfly. The name of the strategy is Bullish Butterfly. Right? These are some of its rules. Right? We will trade the script on Nifty . The duration is five days. Meaning, we will hold this position for a maximum of five days. Right? If the target or stop loss is hit in between, we will exit. Otherwise, we will hold it for the maximum time. Expiries will be bi-weekly . Now, what is bi-weekly? The current week running is what we call weekly. The week following that is what we call bi-weekly. Right? Now the entry date here will be Monday. So, Nifty's expiry is currently on Tuesday. We are taking the trade on Monday. So, instead of choosing the next day's expiry, we will choose the following week's expiry . So automatically, it will become 8 DTE . DTE means Days to Expiry. There are eight days left for that contract to expire. So, simply come to ADT on Monday. The entry time here is 3:30 to 3:35. I will also show you the backtest report for this strategy. In the backtest, I have taken the entry time as 3:00 because, before August, our market used to close at 3:30. So, I have used 3:00 as the backtesting time. Now you can enter between 3:30 and 3:35. A minute or two won't make much of a difference because after 3:30, you know where the closing was. Right? So, when we forward test after August, you can do it anywhere between 3:30 and 3:35. If you backtest before August, you should use 3:00 so it matches my backtest report. I mean, what we are about to see is that this strategy had a total of 28-29 trades in 2023. There is a loss in only one week. The rest have 96%accuracy. And what happened in the market during that one week? The market had fallen significantly. About how many points? Around 450 points . >> The point is that if Nifty gaps down by around 2%, >> then you will incur a loss. Loss case. >> It also depends on which day it happens . >> If I take a trade on Monday and it happens on Tuesday, then you will have a loss. But if I take a trade on Monday and it happens on Wednesday or Thursday , then there will be no loss. >> Okay? >> Because theta decay will have already occurred. >> Correct. >> Alright? We will see that in an example . >> Correct. And that is probably why you are creating the position at the Monday close. And when you say five days, you mean exit this position on Friday, >> so that the potential 2%gap that comes after 2 days >> Yes. >> is removed from the system. >> Because there is a higher chance of a gap up or a gap down after a weekend or a long holiday. >> It can happen anytime, but the chances are slightly higher on Monday. If you crunch the data, the biggest gap ups and gap downs have happened on Mondays. And one more thing, whenever there is a big gap up or gap down on Monday, it feels volatile; like a huge gap down occurred and it recovered completely. A huge gap up occurred and it fell completely. So, I don't want to get caught in that volatility. Whatever happens on that first Monday, once it ends in the evening, the volatility sets the tone for the entire week. Now, this is where our target is set. Our target is 1%of the deployed capital . In your case, the deployed capital is ₹ 40 lakh. Yes. Meaning, if you are doing it with one lot, then 1%will be calculated on the margin required for that lot. That is your target, and your stop loss is 1%of your total deployed capital. My question here is, if I sell just one lot, it might take a margin of 2.5 lakhs. >> Hmm. >> But if I do something in the other leg, the margin might be 1 lakh. >> Hmm. >> So, when we calculate the deployed margin, we will combine both of them. What happened in the strategy overall? Okay. You should not look at an individual leg because whenever you do non-directional option selling and build strategies, we check the strategy margin, not the individual legs. >> Okay, got it. So, our target will be 1% , and our stop loss will be 1%. Now, a term comes in here, Sahil sir, which is Max Credit and Max Debit. So, this is the beauty of this strategy, Max Credit , Max Debit. You won't understand it here; I will explain what it is when we create the payoff graph. And because of this, the 96%accuracy I am talking about......has come only and only because of these rules. Because when we build a strategy, there are many permutations and combinations involved. So, we must know when to stay away from the trade. When we should not enter a trade. It is very important to know this . If you keep trading randomly every week, you will not get high accuracy. The second thing is that you should also know when the market regime is changing . When is the VIX low, and when is the VIX high? If you run a low-VIX strategy in a high-VIX market, you will definitely incur losses. So, when the market regime changes, your strategy should be such that it can adapt to that regime. So, this simple rule, the 6%Max Credit, is basically a filter for the strategy to adapt to the regime. >> Correct. >> That when the VIX is high, your premiums will be high. If the premiums are high, you will receive more credit. So, suppose I am getting a 1.5%credit, then a 200-point move in the market at that time is not a big deal. It can happen in 2 minutes or in 5 minutes. In such a situation, it becomes important for me to stay at least 500-600 points away from the spot so that my SL doesn't get hit during that volatility. And that is why our accuracy is so good. So, we have discussed all those factors. So, this is our simple rule. I will explain credit and debit in the next payoff graph. Okay ? Now let's come to strike selection, like we have to set up the trade on Monday at 3:30 PM. Okay? We need to take a trade for the next week's expiry. There will be a 1%target. There will be a 1%stop loss. But what will be the strikes? So, for strike selection, let's take an example. Let's say our spot is 24,000. Okay? We don't need to look at the market—whether it's bullish, bearish, or if there's a breakout, it doesn't matter . Don't even look at the chart. You will trade here without looking at the chart . Okay? So, just look at your spot, what is your spot? Suppose the market spot is 24,000, then you will buy 200 points away from that spot on the put side. That is, you will buy one lot of the 23,800 put. Then, 200 points further away from that, you will sell two lots. So the spot was 24,000. We bought one lot of 23,800. We sold two lots of 23,600. So basically, it has become a 1 : 2 put ratio. Suppose we bought a premium of ₹ 100. We sold two for 50-50 , so we also received a credit of ₹ 100 from here. But now, what is the problem here? Your payoff graph will look like this, with unlimited risk. Okay? So, you cannot carry unlimited risk on the put side because a big gap-down can happen at any time. So, what will we do there? We will buy a hedge. Where will we buy the hedge? 400 points away from the selling leg. For example, if I tell you here, if your spot is 24,000, then 23,800 buy. Okay? 200 points away. 400 points away from the spot, meaning 200 points from the buying leg, so 23,600 two lots sell, and this one, it will be one lot of 23,200, as you can see here, x 2x x. >> Correct, okay, so its payoff graph, sir , will look something like this. This is a payoff graph where you have risk on the downside, no risk on the upside, no risk in sideways, no risk in sideways to bearish, and risk only in, I mean, extremely bearish scenarios. I want to make a point here, sir, about why people are struggling with option selling. Option selling was a very easy business before 2022, or if I say even easier, before 2019. Even today, if someone has the data, just go to the chart and build a 250-point strangle. There is profit every week. Before 2019, between 2017 and 2019, sell any weekly strangle or straddle. You are bound to get a profit. It was working very easily until 2022. Iron Fly and Iron Condor, which are famous strategies , everyone was making money. After 2023 , when the VIX went very low, these strategies stopped working. The market became very volatile. Access became available to a lot of people. Algos arrived. Previously, what used to happen was that when there were no algos, if someone was selling a put, you could see the OI of that strike increasing, indicating heavy writing. Everyone was selling the same thing. In today's time , with a single algo, positions are being created on both sides every fraction of a second. Calls are being sold, puts are being sold. And contracts worth thousands of crores are being sold every fraction of a second. So, if you try to capture this volatility with old, outdated strategies , it is difficult to make money. I will give you an example too. Let's say I created an Iron Condor payoff graph here. What do we have here, sir? In the equity market, you have three directions. Bullish, bearish, sideways. In the options market, sir, there are five directions. Bullish, sideways to bullish, sideways, sideways to bearish, and bearish. Right? Here, if it is sideways to bullish or bullish, you will have a loss. If it goes up, you will have a loss, sir. If it goes down, there will be a loss. When will money be made ? When it is sideways. Right? Similarly , if I show you another famous strategy , that is the Iron Fly. In this, too, it is the same; if it is sideways, then you will make money. If it becomes sideways to bullish or bearish, you won't make money. It means that whether it is Iron Condor, Iron Fly, or Calendars, these strategies are making money for you in only one scenario. That is sideways. There is so much volatility, so much global uncertainty—Trump, war, and so many things happening here in India. In today’s time, you cannot expect the market to always remain in a range. Right? So, if you are using an outdated strategy where the probability is only in one scenario. And you have to struggle or adjust in the other four scenarios, then you cannot make money. You need to build a system where your probability of profit increases. Right? So that more scenarios are covered there. >> Yes. Where you are making a profit in more scenarios. Like, let me explain with a simple example. So, suppose I bought a 24,700 call and sold two lots of 24,800. Right? Suppose I went further out and bought a hedge too. One. Right? Now, understand that this is basically a call ratio. Now, if you look here, the market will be bearish. If the market goes down, I will make money. If the market is sideways to bearish, I will make money. If the market is sideways, I will keep the credit I collected—you can see a 1%credit. Expiry...the expiry in the black box, yes, next to 11th August , 838 is written in brackets, 1%. That is my credit. Meaning, the money I have invested—a margin of ₹ 83,000 is visible here. >> Correct? >> On that, I will get ₹ 838. That is 1%, so I will make 1%this week even in a sideways market. Even if it turns sideways to bullish and the market goes up from here, it will still pay me because I have an inside hedge. Here, there is a buy before the sell. So , money is being made in four scenarios . Bearish, sideways to bearish, sideways , and sideways to bullish market. When will I incur a loss? When the market becomes extremely bullish and opens with a very large gap up. So, what is happening in this strategy? You are making money in four out of five scenarios. Whereas in outdated, old strategies, you are making money in only one scenario, in which making money is difficult. And only with the help of resources, I don't even talk about "zero adjustment" in option selling, whether you are selling monthly positional or weekly positions and you are not making a single adjustment for the whole month. How is that even possible? That is only possible because when you trade ratios, its POP, or Probability of Profit, is already above 80-85%. Meaning, the stats are already in your favor. In the week or month that goes against you, you simply need to take a small loss and exit. Otherwise, the market itself will bring money to your home. Okay? So now, let's talk about it. We have seen the payoff graph. Now let's try to create one for a week and see how it is made. For example , let's look at the latest week. Right now, the market is falling heavily. You know the market is very bearish. We are shooting this on the 1st of October. I am taking the 28th of September data. What did we do? Instead of 316, I am taking 332 or 333. Okay? Here, the expiry we have selected is 6th October. That is 8 DTE, it is written 8 DTE below it as well. Okay? I have done this. Now , whenever we choose spots, if your at-the-money is 850 or any 50-point strike, we will avoid it. Okay? We will always take the 100-point strikes. So, instead of 850, we will take 800. Don't go back, go further away. Okay? 800 is our at-the-money. What will be 200 points away from 800, sir? 22600, and what will be 200 points away from that, sir? 22400. How much do we need to sell ? Two lots. Okay. And 400 points further away from that is 22,000. Correct, my payoff graph is ready. Okay ? Now, the max credit and max debit filter I had applied. Now, the credit and debit we need to check, keep in mind that we only need to look at this thin line for the debit and credit. Wherever I hover here, the value written next to the expiry is 435, and next to that is -0.5%. That is my debit. Correct. That is my overall debit for this strategy. If it is more than 7%in any week, it means the IV is very low. We will not make a trade in that week. >> Correct. >> Okay? If you look at the filter here, what was the max debit? >> Now, what does this mean? Suppose, for example, instead of 52, it were let's say 45, then the debit you are getting is 1.7%. Correct. Meaning if the premium is low, if the selling premium is low, then what will happen is if the market goes up a lot, you will realize this whole debit in your P&L. So sir, if you are making 1%and while losing you lose 1%or more than 1%, then you will never be profitable. >> Correct. >> That is why I created a 0.7%buffer so that if a loss comes, it will be 1%. And that same 0.7%is to be realized on the day of expiry. >> Because the debit, right, that will be zero on the day of expiry. So if I am even carrying 7%, then in any week if I have a loss, it won't be more than 5%because I will exit before the Friday expiry. >> Friday, correct, so 2%will remain, right , before it goes to zero. >> Correct, so by adding this buffer, I am always maintaining my risk-reward ratio . Okay. Now I will come back to the actual price we had, which is 52, one actually. Okay, so it is 5%, which means we will execute the trade. Okay. Now I will create a position here for around 10 lakhs, meaning we will create a margin of around 10 lakhs, so that we can see what the MTM is. Now sir, this is a tool, a simulation tool. It is Monday here, I will move it to the next day. The market came down, you check the spot too, when we made the trade, our spot was 22780. Okay? The next day, the market opened with a gap down of around 100 points. Around 780, the market is opening at 668 . There was a gap down of about 110 points. How much loss did you incur, sir ? >> 625 on just one lot. On 1 lakh, 1%—this is something that, you know, when it comes to psychology, you can handle it easily. On 10 lakhs, what is 600 anyway ? It's nothing. Okay? Then we will go, it is showing a 4%loss. Okay? What is our stop loss? Our stop loss is one. Okay? So we will sit comfortably. We will sit. We will sit. Okay? Okay? Now look, the next day, Wednesday, we are getting a 4%profit. >> Correct. >> Now, ratios are the only strategy where , sir, even while being in a debit, overall, your spot is above the debit area. Even then you are getting a profit. This is possible only and only in ratios. In Iron Condors or Iron Flies, as soon as it enters the red zone, theta decay works against you there. That's where the loss occurs. >> Correct. >> Why is it working in the positive here? Because you have an inside hedge. If you look at this, the overall 89 that you bought, how much is it now? 94. >> Meaning it is giving us a profit. >> And the 51 we sold has become 45, so it is also giving us a profit. >> Correct. >> So, the inside buying is giving profit, and the selling leg is also giving profit. This can only happen in ratios. >> Correct. There is no inside buying in an Iron Fly or Iron Condor. Right? So, if we get 0.44%, we will stay put. If we get 2%, we will stay put. Once 1%is reached, sir, book out right here. We entered the trade on Monday, and by Wednesday evening around 2:00 or 3:00 PM if we get around 1%, we will quietly close the trade and leave. Look here, even if I check around 3:14 PM, I am seeing ₹ 9828, so I will close the trade. >> So, if you get this on the very first or second day, your cycle resets to the next Monday; you don't do anything in between. >> Correct, correct, correct. >> Right, and if you look at its journey, the market first went down from here and then went up, if you remember. >> Correct, absolutely right. It went up from here, then came down. Meaning there was so much volatility, still, without doing anything, without punching an extra order, without increasing your STT charges, you made money. In a week, in 2 to 3 days, your 1%came, simple! Right, so this is simple; there isn't really anything too complex about it. If I show you its backtest report, so sir, this is the backtest report from January 2026 to September 2026 till today. It has generated 29 trades. Now, what do these 29 trades mean? There have been some weeks where a debit of more than 7%is coming, so we will skip that week. We won't do anything. A credit of more than 6%will come. So, I will tell you what to do for that as well. So, out of a total of 29 trades, 28 trades are profitable. One trade is in a loss. The average profit is coming close to 1%. We can call it 0.9%. Right? And our average loss is the 20 that happened one week. Right? Otherwise, sir, all other weeks you made a return of around 0.25%without doing anything. >> Without doing anything, I mean you gave 7 years, after that we will speak without anything. >> Yes, I mean for me 7 years is too much. But if you follow this system, eventually you know that POP is in my favor. Okay? Theta decay will be in my favor. And the system, if you are backtesting it, is in profit. Which I say at the end of the year, sir. Now, one thing here that many people won't talk about is the worst-case scenario. In a discussion, I said that whenever I do any work, I discuss the best-case and worst-case scenarios. Let's discuss that too because we are building it on the put side, sir. So, many people have this concern that if a gap down opens, if a lower circuit hits, you will be ruined, this will happen. So let's discuss that too so the audience knows, we shouldn't just tell the good things. Okay, if I have created a position of ₹ 1 lakh, if tomorrow itself...suppose if you created a position of ₹ 1 lakh on Monday at 3:30 and on Tuesday morning ... >> Yes, tomorrow itself, suppose a lower circuit of 5%opens. Okay. >> Yes, here. >> A lower circuit of around 5%opens, I lose 10%. So if I look, I am coming back 3 months. I admit that 10%can be a big number, taking a hit. But you know that you are also making 1%every week. Meaning if I look at the month, if you are averaging 2.5%to 3%, then you go back 3 months. After 3 months, that will be recovered. And whenever a circuit hits, it will either be an upper circuit or a lower circuit. If you have an Iron Fly or Iron Condor, then whether it hits upper or lower, in both cases you will have a loss, correct? In this, at least in that circuit scenario, in 50%of cases you have no fear, because like on Feb 3rd the upper circuit hit, so on Feb 3rd there was no loss in this, no matter how much it opens above. >> One leg cover question: if a lower circuit hits, then 10%of your deployed capital will go. If an upper circuit hits, nothing will happen. If you are not mentally prepared to lose that 10%, don't deploy. I don't want comments saying that I'll be ruined by a 10%loss . If a 10%loss ruins you, then don't do it. Either adjust your position sizing so that if I have one crore, I'll only deploy 20 lakhs of that into this strategy. >> Then 10%of that would be... >> It would be that much. Overall, on one year, give 2 lakhs. >> Absolutely. >> So if you are not comfortable with any risk, you can play around with the position sizing and the strategy, like how much I've diversified the fund allocation. >> So many people ask why I didn't create one for the call side. I did create a similar strategy for the call side, which is just a call ratio. I'll show you its results too; it has 24 trades, and this is a backtest for this year, from January 2026, with a 92% accuracy. But if you remember, on February 3rd, when the trade happened, there was an upper circuit. This is the result on 10 lakhs, which is a loss of 53,000. >> Okay. >> Meaning I had a 5.3%loss on the day of February 3rd. So despite that upper circuit, this strategy is still 11.1%in profit by the end of this year. Meaning the worst-case scenario was hit . In this year, even then, I am at a 12 %profit. Plus, I got 6%from G-Secs. I made 18%. So if you are doing this strategy, be prepared that you could face a 10%loss. Even then, I say you will make 12%, 13%, or 15%annually. Plus , make 6-7%from G-Secs. You will get 20-22%without giving so much time to the market. >> And that loss will only happen if the market hits a circuit. >> Yes. Now, one more thing, like in the month of March, there was a very sharp fall. If you remember the entire month of March... >> Yes, yes, so Nifty fell almost 3000 points in March. >> So let's see how the strategy performed at that time. >> Correct. >> Right? Because see, everyone talks about best-case scenarios. >> Correct. >> Discussing worst-case scenarios is more important, according to me. Okay? So we will take 36 for that time because there was no data then. Now look, I will show you the beauty of this strategy. This is 24,900. I will buy at 24,700. I will sell at 24,500. According to the rules. Okay? >> And according to its rules, I will buy at 24,100. >> Now sir, what am I getting here? 9% credit. >> Correct. >> Okay? I said not to take more than 6%. So whenever you get more credit, what will you do? Go further away. >> Correct. This credit is high. It means IV is high. >> Correct. >> IV is high. It means volatility is high . >> It means the strike of your option legs that you kept at 200 points, 400 points , and 800 points will now increase and adjust until you get 6%credit. >> Exactly, exactly. How will we adjust? The first buying leg will always be shifted by 100 points. Do not take the 50-point strikes. >> To avoid illiquidity. >> Correct. >> So what did I do? Where it was 200 points, from 24,900 to 24,700, now I have moved to 600. >> Correct. Keep the difference between the strikes the same. Just need to move away from the spot. >> Correct. >> How much is it now? 8%, I will go further. 24,500, 24,300, and 24...sorry , 23,900. Now I got 7%. >> Which means your criteria... >> No, still need 6%. >> That was for the other one, debit. >> Yes, that was needed for the debit case . >> Now my 6%criteria is being fulfilled. >> Correct. >> Now understand one thing, sir. How far is your first buying leg from the spot now? 400 points away. IV increased, volatility increased. So my strategy automatically adapted to that regime and placed me 400 points below instead of 200 points away. >> Correct. >> Which means now, up to 400 points, I won't face much trouble. Now, look, you also know that whenever a lower circuit hit, India VIX was above 15. You can crunch the data. In this situation, when the VIX was low and our trade was in debit, we were facing a 10%loss on a 5%lower circuit. Here, when we look at it while our trade is in credit and VIX is high, if a 5% lower circuit hits, sir, you can see it yourself, on a 5.07%fall, what is your loss sir? >> Here, 5.3%. >> 5.3%. >> Correct. Meaning in the worst-case scenario, the loss this trade will give you on a lower circuit is 5%. As an option seller, you should be comfortable with the fact that a 5% black swan event is something you will accept. If you won't, then don't do it, just put your money in an FD. Correct? Alright. So when volatility increases, even your worst-case scenario improves in your favor. It won't hit the lower circuit at low VIX; it only happens at higher VIX. In high VIX, the 10%move that happens, because your VIX is already high, you stay positioned far away. Your selling legs will also be further out, so even if the lower circuit hits, you'll lose 5-6%instead of 10%. This is the challenge, right? All option traders are confused, asking, "Sir, what to do at low VIX?""What to do at high VIX?""What to do at medium VIX?""What to do in these VIX levels?" You should build a single system in such a way that it adapts. Correct. >> Because you never know where it will change. I will add another rule to this , which I'll share now. Look, there was a gap down the next day. Here, our stop loss is getting hit. Okay? I want to tell you a rule that was left out and isn't there, which is why I specifically considered this week. Look at what happened here; understand that the market was at 24,875. Okay, from 24,875 , the market dropped straight to 24,365 , a 500-point fall. >> Correct, on a 500-point fall, sir, how much loss are you taking? 1.1%. >> 1.1%, that's it. Okay, so in that case, if you remember, I mentioned that while creating the strategy, I discovered a pattern: in any week with a holiday... >> Correct. >> In that week, you...I didn't pay attention, but if you look at the calendar, the 3rd was a holiday, which is why I incurred a loss on the 4th. So, in all the backtests I've done, every time I saw that in any week with a holiday...look, it’s not like I did it intentionally; I just took the 2nd of March, I didn't remember the 3rd was a holiday, and it happened. So, when you practice, these filters help you understand the patterns. I saw many such weeks where there was a loss in the week that had a holiday. So, a pattern emerged that, hey, in a week where there is a holiday or any market closure, don't even initiate that trade. So this is one rule that you need to exclude. Second rule: if you have placed a trade on Monday and by Tuesday your first buying leg is getting crossed. You placed it today, and by tomorrow the market opens or moves 200 points lower. The first buying leg is getting crossed . If your MTM is in the red, you will exit . >> Okay? >> Without waiting for your stop loss. Why? Because theta decay hasn't kicked in yet. You entered today, and it arrived tomorrow. If it moves 200 points away tomorrow, then after a point, this blue line will start causing you huge losses. So even if your stop loss hasn't been hit and you are facing a 0.2%or 0.3 %loss. Just take it and exit. You can recover it next week, look at Monday. But if it doesn't cross on Tuesday and crosses on Wednesday, then we will stay put. Then we will wait for a 1%stop loss . So these are the two rules that are perhaps not mentioned here. Yes, they aren't mentioned in this. I will tell you. First, in the week where there is a holiday, we should not take a trade. Second, if you take a trade on Monday and the first buying leg is crossed on Tuesday, and at the time of crossing the spot or the first buying leg your MTM is in the red, exit. So in the buying leg, for instance, suppose Nifty is at 24,000. You must have bought a 23,800 put. You are saying that if Nifty, which closed at 24,000 on Monday, opens directly at 23,800 in the morning. >> Yes. >> Or opens below that. >> Opens. You should exit immediately. My question arises here: what if it opens at 23,850? >> Yes, then you will stay put. Then you will stay put. But if it crosses 23,800 during the day, then you exit immediately. Only for Tuesday. On other days, even if it reaches 23,750 and your 1%SL hasn't been hit, you will stay put with your 1%SL. >> Correct, because now theta is starting to kick into your positions. Now you will really need a strong move in order to incur losses. Right? Let me show you its week-wise backtest. That is this one . See, you will see I started from January 12th, because if you remember, VIX was very low in January. Premiums were very low, so no trades were formed in the first week of January. So these are only three trades in total. Okay? You will be able to see it easily here. Initially, because VIX was low, less money was made. But as VIX moved up a bit. You will see that week on week, you are making 1% profit. >> Correct. >> This is the week where you had a loss. Where your first buying leg is being crossed. >> Correct. >> So, we will exit during that week. And even after that, you will see that every week you have made a profit using a simple rule-based system, so don't just take my word for it; first, go use this tool, this simulator, and simulate the rules I have mentioned. After simulating those rules, even if not 97%, if 27 out of 29 trades end up in profit, you can understand that the strategy is profitable. Then, forward-test it for 3 months without putting in a single rupee, because even if I give you a very good strategy, you won't be able to trade it because you lack conviction in it, right ? >> You invest with conviction; no matter how much of a "holy grail" someone gives you, even if my strategy has only 35% accuracy, I can put in my ₹ 40-50 lakhs , but you won't be able to. >> Correct. >> So, conviction is necessary, so don't just listen to me; anyone watching this podcast, first go and back-test the strategy. After back-testing, forward-test it for 3 months without putting in a single rupee of your own. After that, when your back-test and forward-test match for 3 months, then you start with one lot. Okay? That is where your execution errors and psychological errors will be fixed. Because if a small error occurs with one lot, it doesn't matter. You are only losing 100 or 200 rupees. You will fix it. When you are booking profits week-on-week with one lot, many people will say, "Sir, the brokerage will take it all." No brokerage will be lost. Hardly, if we talk about InCred Money, it only costs ₹ 9. First, you back-tested it. You forward-tested it for 3 months. For the first 3 months, you will only gain confidence with one or two lots. When you gain confidence, you have a total of 6 months of experience. 3 months of your back-test and 3 months of your forward-test. 3 months of real testing. After 6 months of gaining confidence, you then gradually increase. Make it five lots from one, ten lots from five. Make it twenty lots from ten. Because now you have understood all the ins and outs of how the MTM works. Whether the way the MTM is moving fits into my psychology or not. So, your strategy itself will answer whether you can scale it or not. You will have to follow this entire process. As a trader, you become profitable. So it's not like someone said, "Look, I bought a put today and made this much money." And tomorrow too you're just living by the grace of God with puts. Kundan, there is so much to learn from you. There is huge scope for improvement in all of us. I wish you all the best in the journey of improving. And I would leave it up to the users. On which of Kundan Sir's systems would you like more input, or what are your opinions and points of view on this Blaz Butterfly system? Do share it with us in the comments. It works as excellent feedback for us. And if you want a quant-based trading system that is based on options pricing and its properties, rather than just analysis. If you liked this system, do share it with your friends and family. Once again , Kundan ji, thank you for taking your valuable time to visit us here. Thank you so much for your time and wisdom. I look forward to hosting you again. Thanks a lot for this opportunity.