How this Options Seller makes 4% Return every month!! #Face2Face with Reyaansh Upadhyay

Hello friends, I am your friend, co-founder of StockEdge and elearnmarkets, Vivek Bajaj friends, options trading is becoming huge, everyone wants to do it and they are making money some people are struggling, so till the time you are not watching the journey cash market, futures, options, then options buying, options selling the right formula of trading and making money in options that is understood over a period of time some experts who have come here, have very candidly shared their experiences, which is around options selling So my today’s guest has a great YouTube channel and is a genuine person. See what I do is, I find people on YouTube and Twitter and after watching their content, I get an idea if they’re doing it genuinely or not. So I have a guest today who’ll enlighten us with an option selling strategy which is making money. I’m recording in June, so last month when the market was extremely volatile, in that too he got an approximate return of 8% from options. So we’re going to learn a very interesting strategy, this is going to be a long video. Sit with a pen and paper because this Face2Face is going to be great for you. I’m going to welcome Reyaansh Upadhyay aka Theta Gainer for this Face2Face. hello Reyaansh, how are you doing? I am good Thank you so much for coming to Kolkata. Are you coming from Gwalior? not Gwalior, I am coming from Delhi. I am based in Delhi, so I am coming directly from there. Nice! It only took 2 hours, not much I have my own reasons to call you to Kolkata we have a whole setup here, and my team also likes when someone comes here for a chat we will also show you the whole Kolkata. Yes for sure, I have seen that the point area is really good here The greenery is also more here, we don't get to see this in Delhi The greenery is also more here, we don't get to see this in Delhi by the way, Kolkata is the second most polluted city in India, just to inform you. After Delhi. I thought you will say it is clean, yes it is indeed! so welcome to this face2face, hope we will have a great learning experience your background is engineer, then tech, and then into trading he has a very boy next door profile lot of people with your background have come into the market and all of the, want to do so much I actually connected with him through his YouTube channel I keep on searching for the right people, and so many people are making content on YouTube who is right and who is wrong, you will not understand if you do not watch the videos consistently so I saw his content, and his YouTube channel is really good so I invited him so that we can have a talk the format is that we will know your journey, and then which strategy you use I will explain my background to you in one minute I was really excellent in my studies, I used to study till 3 am for my exams till 12th, and for that reason only my family wanted me in IIT They sent me to Kota, and I went on my own will and no one pressurized me after going there, I did a lot of hard work for 3 months the environment there is very pressurizing, people only study. You have no time to concentrate on other things but I was not like that, I was different. I used to also play cricket with studies or football, but it was not like that there, it was a small room you have to keep studying, solving questions and getting it solved the next day I was only able to stay like this for 7-8 months I came back after that, it is not that I was worried what my father will say I was open with him , so I told him I won't be able to do this he told me to continue my studies in Gwalior. So I graduated from the best college in Gwalior so in third year, I got into infosys from the campus so everyone was really happy because infosys is a very good company when was this? This is about 2015 end. The interview happens in the last semester of 3rd year so after infosys it was like I am done because I got a company this was after I passed my 4th year, I got their offer letter in 2016 but I got the joining letter in 2016 end, so they took 7-8 months those 8-9 months I had nothing to do I had the offer letter but nothing to do in this period, I had a lot of exposure to the stock market through YouTube then slowly I started learning things, so that time things were not there, which option sellers do now a lot of strategies were like earning money from futures, and at that time people used to talk less about options and more about futures she used to talk about futures and stocks from there it started, and I took money from my father as I was not earning I started futures from there, that time SBI was a popular stock I tried doing it there, but I almost lost a lot of capital. Sometimes it worked sometimes it did not people enter stock market for two reasons only, it might be greed or passion passion comes after 2 years. SBI has made me lose a lot of money, you started with what capital? it was my father's money only and in that I lost nearly 70% it was in futures, that time I had no idea of options that period was over of 8-9 months, and then I went to Infosys ones you are addicted to trading, you don't think about anything else you just want to invest money here, so I did the same the salary was around 22k in the beginning for 6 months when you become permanent you get around 30k so I started adding money every month after a time you become permanent, you get a salary loan kind of thing I also took that because it had less risk risk cover was that the interest was really low so I took that, and then I collected 7 lacs in total for this then I got into options selling, this was in which year? First half of 2017 in those 6 months I did options buying once I had 60,000 profit, then I had 40,000, had 1 lac profit in options buying and it feels like you know everything then I checked ultra tech, and then I did options buying At that time I had no idea what was theta decay. Now I will say how I started from options selling from options buying. It started from the ultratech cement stock my direction used to be right most of the time, at least 80% of the time but I was not aware that I don't need to buy an OTM of 400 rupees I used to do it and then I used to feel why I had that loss the momentum used to be right, then I went towards option selling and then I came to know overnight that theta decay is also a thing due to which I am losing I came to know about this in 6 months, and then I closed it I took good decisions, so my father was also happy that I left Kota and came back, also told him the reason so I got a lot of support from family, if you don't have family support then. Yes, if my family was not supportive then maybe I wouldn't be here we wouldn't be talking right now. Do you suggest that if people are getting into trading, they should tell their family? Yes, they should be clear In India, people don't have the habit of telling. If I tell my family that I had a loss of 30,000 then it won't be a problem. At least, I will not have one tension If I do another loss of 30000 then it will be 60000 and now I will be more worried so it is better to tell them from before, so they will support you so it is better to tell them before. So it is a message for everyone here that if your family doesn't know about it then tell them now now the Indian society has moved beyond this, if people think then let them do it I will tell you this, when I started my YouTube channel, just after that 69 lakh accounts were opened when I started my YouTube channel, basically at the end of 2020 all of them must be having 2 reasons, one must be greed because they don't have anything else to do someone's shop got closed down, some of them were getting half money and some even lost their job so they saw an option of stock market, so they took it as a option or greed both are wrong, you can't enter it as an option, then it will be just like a data entry job where you will get 1500 rupees but this is place is not like this everyone has to come back here, if Reliance is changing the price then it will happen here. that's true, everything is here. That's a good usage so how you have evolved in this market and from futures to options, we know all this but you can project this through a presentation so we will know better I am not very good at this, but it looks good. My friends have helped me so I will show you how many people were already doing and how many have started now we are 138 cr, but only 1.2 cr only actively invests in the stock market, actively means people who open their account in 3 months and buy and sell in the pandemic period, nearly 2.6 million people opened their new accounts basically, they opened their demat account where they have done trading in the pandemic assume that this is Netherlands' population, so 2 things happened from this, so their count was more so that supported the Indian Market so when the market is pushed down, more panic will be created I started with 3 lacs, I think this is an average in India, so I guess people can start with 3 lacs I have also earned money through options buying, it was around 3 lacs in ultratech cement It took me 6 months to understand my mistake that I am buying OTM You will have a lot of pressure and it is possible that you will lose money in directions so if you have 10000 then also you have a premium, so it gives you an opportunity that you can give 1000 and buy a premium See full capital is neither used in selling nor buying. Buying requires very high skill, so if someone’s earning from options buying then understand that his skill is very good. Because, first thing, you need to be fully focussed on options buying. It’s not like you’ve bought it and you go somewhere, come back in the evening and you’ll get money. You’ve to sit, you’ve to see when to exit or if you get the momentum again then you’ll buy again. It’s a very skilled job and it requires the highest risk management. Maybe in options selling, safeguard ourselves by hedging and using options strategies. It is nothing, in that you just have to plan accordingly. So it doesn’t work like this here, where you put full money and earn. This is the biggest mistake. Just 1 year back, In The Money got introduced on YouTube. So people started buying In The Money and At The Money considering that there’ll be less Theta Decay. If you’d asked this question earlier, which option you’ll buy if you think that market will go up? If the market is at 16,000 they’d say 16,300 or 16,400. But now, no one will say this. because everyone has gotten smarter. Now everyone wanted to buy at 16,000 or 15,900. But this has happened after watching YouTube. I don’t know whether they've applied it or not. But this topic is serious. They need to stay close if they’re a buyer and if they’re a seller they can be far. So if you’re a buyer, stay close and if you’re a seller then stay at a distance Because being at a distance is good for sellers. Try to consume Theta, which means use Theta on your side The Term Theta, basically I earned through Theta so I named my YouTube Channel Theta Gainers. See basically there’s a graph, I’ll try to make you understand in this graph also, that the pricing of the options, the closer you get to the expiry, the more the chances of loss will go on increasing overnight in option buying. In Intraday, what happens is, assume it has decayed overnight, then you can get hold of that in the movement that happens in Intraday. But if we talk about overnight, then you can make a loss even with the direction. I’ve majorly gone to a monthly timeframe in 2022 because in 2022, in the starting I did weekly and Intraday, I’m good at Intraday so I used it for option selling but I realized that recently it’d become difficult to do weekly because I give priority to Volatility and now I’ll tell you things on the basis of Volatility, but while reading volatility I found now that in 2022 if I’m making any weekly trade it’s going tough. I find difficulty adjusting it, even if I’m shifting it, I’m unable to find some things, premium is very low and while shifting you need to pay the Adjustment Cost. Adjustment Cost is deducted from your profit only. So what you thought to be the profit from that strategy is now been expended to the cost. So weekly it started getting tougher. Then I shifted to monthly. So today, we’re going to discuss on the basis of monthly and we’ll target people who’ve got a little less capital and are just beginning. So they can start to preserve the capital easily. And you don’t need to be a full time trader, right? It’s not needed. So, in the beginning, you’ll tell the strategies for part-timers and working people. Basically you’ve to track the market till 9.45 AM and then after 3.20 PM for some time. You’ve to bring changes at these 2 times only. Apart from this, you don’t have to be present. And shall we close this overhang every Thursday? Yes, close it. Okay, for the time being, we should close it. If you’re new, close. Spend 2 years, make some capital and then try. Not like it doesn’t have money. Of course, it has but you’ll need a little bit more experience and practice for that. Okay, tell me one thing. I want your opinion on this, what many people do is, they work for rest of the day on weekdays and then take leave on Thursday. And do trading from morning to evening only on Thursday. And the rest of the days, they do other work. Do you think that is long-term sustainable? I’ll tell you this thing by showing P&L, you’ll understand. I’ll show you the catch here. Your question, Thursday one. I’ll show you in the P&L. March, April, May, and June these last 3 months were tough if you were a positional trader- anytime gap up and anytime gap down. But if you notice, It is a Thursday and you’ll see this is the last Thursday of March 1.63 lakhs, then again 16000, then again 1 lakh, then again 1.7 lakhs, you’ll see only one is red till now So basically what happens is, even I do intraday because I was good at directions. So I do both Intraday and positional. I’m in the market for 8 years. We never stay on one strategy, we diversify it. But if I say that I’m here to tell something, and if it’ll help someone and I’ll tell 8 strategies then nobody will be benefited. It comes after some experience. Now I’ll tell the strategy which is safest and this happens, people work on it. See I may do it for all days but some people do it for only 1 day but they make money here. So it’s not wrong if they do it only on Thursday but to do that, you need confidence and you should know what you’re doing. If after watching one YouTube video, you think that you’ll do this from tomorrow. It won’t happen. It’s a different part. But the strategy works. And positionally in 3 months now you see here, you must be seeing a lot of red but ultimately you’ll see that you’d make money and you’re not at loss. I won’t say that this is a huge loss. Why is it not showing you the old? Because I just started with this account in March because I use the algo in Intraday. So to see how the algo works, I needed a separate account. So you created a separate account. The Realised P&L is 5 lakhs in this. Yes, realised is 5 lakhs, and the charges are high but since the charges are below 20%, so it’s fine. If it’d been for 30% or more than that, then there definitely are some mistakes that you need to change. So it must make a lot of trades throughout the day since it’s algo. Yes, I’ll make you understand this in the last. It’s working. I’m basically in the testing phase and thus I didn’t invest big capital in it. How much capital is there? It’s almost 17 lakhs. And in that also, 5 lakhs is Realized P&L. Not bad! It’s getting tested currently. I’ll try to infuse more capital into this later. Now let’s come to the methods of how I do it because everything has a shape and process. So whenever Nifty had a drawdown that Nifty fell by 5%, I try to take some benefit out of it. Because Nifty has fallen and If I see, in the long-term where will the market go? It’ll go up, I can’t think that Nifty will fall. So I’m talking about the investments on that basis only. So whenever the market falls by 5%, I plan to buy 5000 Nifty Bees. Now, 5000 Nifty Bees is near to 6-7 lakhs of investment. Now, why am I buying Nifty Bees? Because It’s such a thing, that I can sell anytime. It’s kind of cash. It seems like an investment but is as good as cash. In times when I feel I need a margin, I pledge it. Now also, the market also went down by 22-23% from its top. So on this basis, I took almost 15000 Nifty Bees. I pledged it all. I get a 91% Margin from it. So I also invested in Nifty on down levels. And I’ve got a 90% Margin also by which I can do option selling. Basically, we can double-use it. But nowadays, we’ve to keep 50% cash, right? You’ve to keep the cash but from an investment point of view, it seems no that I’ve invested also, and I can even use it. Understand like this, if you’re an option seller, you can sell at a margin amount but if you want to buy hedging from both sides it happens on cash because option buying means that you’ll lose to zero. So why will you take margin? The hedging will be done only by cash. So you can’t just keep it margin based, you’ve to keep some cash. So this is also one approach if people want to stay invested and do trading. Nifty Bees is very easy. It’s worth more than 5 billion. So their asset worth is huge so you don't get a risk and the charges are also very low. So the strategy which I’m going to discuss is Bank Nifty based. I could’ve discussed Nifty based but the premiums will be very low in that and I didn’t want to tell you that sell Rs10 from here and there. It won't work for retailers because their glow is different. They’ve seen a lot of money. So I’ll try to discuss Bank Nifty based. So the data which you are seeing in front of you is the weekly movement of Bank Nifty from 2017. It also includes 2020. I’ve not eliminated that data because in 2020 there was an expansion in the data. We get to see what can happen in the worst-case scenario. So if we don’t look at it then there's no use. So basically if you see here then the weekly change below 3% is 85% in the Bank Nifty. Now this range means, it’s not like the market will go up one way. It may happen that the market has gone up by 5% but it has closed by 3%, so one should not think that the market has remained under 3%. Means close to close basis. It may have gone up by 5% and then came down in Intraweek. This is close to close basis but here it won’t matter much if people understand what I came here to tell. I’ll explain this also. After that, the higher range is 3-5% because if something’s for 35000 then its 5% is enough. About 2000 points are moving in a week, so think about what can happen in a year. So the change of 3-5% is 8%. So in a way, we’re going to cover this from 85-8. There is a chance of losses in this area but we’ll define this loss. So today’s monthly strategy is High Value Iron Condor to Iron Fly. First I’ll explain both the Iron Condor and Iron Fly and then I will come to the why ‘High Value’ words are there. what is Iron Condor? Iron Condor is where we sell one put and one call. This is P and this is C. Now, what does High Value mean? High Value means that I want to sell in such area where if I’m right, then it might happen that I don’t have to keep the trade for the whole month. If it’s working for me in 5-8, completing my target. So I’m trying to sell Put and Call in such an area where I can close the trade in 5-8 days. Is it ITM or OTM? This is OTM. Both of these are OTM, we’ll not talk about ITM. We’re talking about OTM only. Iron Condor means 1 Put sell, 1 Call sell, then 1 Call buy and here 1 Put buy. This is Iron Condor creation. Now I’ve said High Value Iron Condor to Iron Fly. Now what is Iron Fly? It’s nothing but we hedge a Straddle. We hedge the Naked Straddle with a defined loss because we need to trade overnight for a month. It’s not like we’re doing it daily. If we were to do daily, I can sell Naked Strangle and Straddle because I can see how the market is and I’ll cut the loss accordingly. But in overnight, you don’t know. There’s some event going on in the US or in India about which we don’t know anything. So I’ll try to be hedged from both sides. We should never leave any leg Naked. So we’ll start from Iron Condor and we’ll take it till Iron Fly and then we’ll adjust it like Iron Fly. What is Iron Fly? We made a Straddle, which I’ll explain to you here separately. Iron Condor, I understood. It’s a very basic concept, all the strategy starts from there. One on the Call side and the other on the Put side. Consider Bank Nifty is at 35000. So to make Iron Fly, you sold a Put of 35000 and also a Call of 35000, if the strike of both is the same, it’ll be called a Straddle. Now we’ve to hedge this Straddle. Let’s say Put was 300 and Call was 300 so the total I’m getting is a premium of 600. So 600 from 35000 is 35600 CE and this side will be 34400 PE. So If I buy both of these, a trade like this will be created. This is Iron Fly. We can also define this, it’s not necessary that I buy this at 600. I can buy this at less than 600, my loss will minimize. Understanding this process is very important. If you make an Iron Condor, it looks like this. This is its profit and this is its loss. Many people don’t know how to calculate its loss. So what is its loss? Difference between the Strike minus Credit. So difference between the strike. Loss is calculated by the difference between buying and selling strike and then deduct profit also and after that multiplying with lot size. Now how to decrease the loss amount? When we close the buying strike with the selling strike and vice-versa, then the loss will decrease. We used this process in the adjustment Got it! And if we watch live examples then it will clarify more easily. Let’s simplify the strategy. We trade on bank nifty. We will take entry on the 1-5th of every month. You can take trades when the current month of trade expires. For example, today is 30th June then we can take trade from tomorrow for July expiry. Expiry must be ended for this month. After that you can take a trade on the next day or 1st of every month. And suppose if the expiry will be 24, then we can take trade on 25. So, it is not necessary to take trade only on the 1st of every month. Some people get confused but you can change this date by a day but it is not a big deal. The strategy will be the iron condor and iron fly strategy. I will explain later And we will choose to sell 25 delta strikes which means we are on that strike where the market will move 25%. That means we save 75% and for hedging, we will buy 17 delta strikes. You can use these as a tip but I will explain why we will choose this And we will adjust by converting iron condor to iron fly and then after that we will continue adjustment as per iron fly. I will explain this adjustment one by one. And the target will be the highest we can get and for stop loss, we will maintain the lowest. We take ₹5 lac margin and use only half. That means we used only ₹2.5 lac here. And we will set a stop loss of 4% of capital in a month, i.e., our stop loss is ₹20,000. So we only lose ₹20000 in a month Nowadays, people lose more than 1% of their capital in a day but we will set our stop loss at 4%. And how much target will we expect? We will set a target of more than 4% and also try to win 10 out of 12 Now, we will discuss the steps for creating a strategy. Here, we used 26th May data, just for example. But we will create a strategy for July. Now, we will sell 25 delta strikes which means we will sell 25 delta puts and 25 delta calls. Here, I will show the strategy also And also tell us where to find the 25 delta call and put? Basically, I used the opstra option to find this value. Actually, you can find this value at the option chain. We check the option chain of 28th July. Here you see the put delta and the call delta. Put side delta shows negative 25 and call side delta shows positive 25.Here you see negative 25 delta and on down side you see positive 25 delta. It does not mean that you can’t take 26, you always select the round figure Here we see 32000 and 32100 and select 32000 because of liquidity. Here we are talking about ₹5 lac. So, we can set up an iron condor with a size of 5 lots which will be valued at nearly ₹2.5-3 lacs cause we hedged our position Here I sell 5 lots of a put strike and then we scroll down, we get positive 25 delta and sell that also Without showing that it is a 17 delta strike, we will directly buy breakeven One break-even is 31,300 and the second one is 35,600. Simply we buy that position from where we get the losses. So now we again go to the option chain. And buy options of 31,300 and 35,600 So you buy 31,300 and call 35,600? Yes, basically we are hedging this position. Now, it looks like that. Don’t panic, if you see any losses. You can manage it by buying position But it does not matter that much because I will not take that much risk on my capital Now how will you test your strategy? And Vivek sir, what do you think about the gap opening in the market? Please tell the general range of gap up and gap down Basically, we see 2-2.5% of gap up or gap down in the market. For bank nifty the gap will be 700-800 points and for Nifty it will be nearly 200 points. Today it will increase but a few years back 80 points means a lot So when you prepare your strategy, you must check that if there is a gap opening of 700-800 points then how much losses you bear. Now the market traded at 33400 and if you add 700 points then 34100. This blue line shows the T+1 day. That means if today, the market moves up, then you get a loss of ₹1600. And if you are talking about ₹5 lacs then ₹1600 is a very minimal percent, then you can take the trade And on the downside if you see then 33400 minus 700 is 32700.here you will get a loss of ₹2000. So, it is okay. So if there is a gap opening then it will not affect our position. So, it will be the creation of the strategy. And now the adjustment part, you can’t adjust until the selling strike does not hit or at 2:30-2:45 pm, your strategy will be far 200 points from selling strike. It is very important for us. So I told it is for working people so we checked at morning and closing time of the market. If you see your trade will close to the selling strike even at 3:00 pm, then you are safe? No, because the market will go down or up. We can’t ignore that. And if I told you that you will adjust your position only at that time when your selling strike hits. Then what you are doing, you square off your position. You can’t do that. Even at 3:00 pm if your selling strike hits 32000, then you have to adjust that also. Ok! The rule is that you can convert an iron condor to iron fly, if it hits 32000 at 3:00 pm. You can’t hold the unbalanced position. If it moves upside then? Same rule, if it moves up then you have to adjust your position between 34800-35000 If the market will reach that position then you have to convert to iron fly. Now, I will backtest this process again. What is the toughest part of the iron condor or iron fly strategy? The toughest part is credit trades because you take credit from the market. And that time volatility increased and events occurred, that are the problems I will teach someone then I choose that month where these events and volatility happened. And May is that month. Because in that month, the market fell 4000 points and then recovered 2000 points also, and India VIX also increased So that month, there were a lot of problems for the iron condor strategy. If you see India VIX, in May, it traded on 18 and in mid month it traded at a high of 25 which is 30% up.VIX increased and there is a movement in the market which is not a good sign. The same thing happened in March. So, if a person can use this strategy in March month then he/she will surely earn a profit Opstra option Analytics is a backtesting app. So we selected Bank nifty and we start our trade on 29th April and the expiry date is 26th May. In the morning, we can take trade at 9:20 am as scalpers will trade and increase volume. So we trade at 10:00 am because at that time volume decreases. So, we start trading at 10:20 am Now, we sell 25 delta strikes, i.e.,sell 25 delta put i.e, 35000 strike price and 25 delta call i.e.,37900 And then buy the break even, i.e. 38,500 and 34,300 You told me that value if I forgot that. So, we buy 34300 put and 38500 call. And what is the margin utilisation? It is back tested so, margin can’t show. But the margin is low as we are hedging the position. People do not understand the risk, they just think of the profit. So, the government takes an initiative to control the losses And also to increase the margin and give margin benefit on hedge position. So our zone is 35200-37700.Blue line always moves. On the 1st day, we got ₹700. On 5th may, we got ₹3000 and on 6th may we got losses. So we checked the previous day whether the market gave the signal or not. See, at 3:00 pm, the market gave the signal. So you told me that you will hold that position. So why do we not adjust the position? And our stop loss is 4% of capital in a month. Stop loss is based on my capital. I lost only 4% in a month i.e., only ₹20000. And per trade? If I get a big loss then I will sit silently for 2-3 days because it will only happen when I make some big mistake. You see yourself that in the market we will manage 5-10% up-down. And we will also check that it will not hit the losses and our work will also be done. And per trade, we will be willing to lose 4% of my capital i.e, ₹20000. Yes, ₹20000 is my stop loss. If I lost ₹20000 then I will not trade that month. Basically you only take 12 trades What will we change? Basically, we will close profitable trade. The untested side will be close and the tested side means where the market will move, we book profit and then we construct an iron fly strategy. Here we close the 37900 call strike which is traded at ₹74 Here the current price shown and the hedge call with a strike of 38500 which is traded at ₹38 If you checked the overall leg which we closed then we nearly earned ₹10000. Now, we will move to the market. Here is 35000 PE. Has the market reached 35000? No, the market did not reach 35000. It is traded at 35200. So we can’t sell 35000 call. We can’t sell the same strike call where the market traded. What can we do now because we have to hold this position. For now, at which premium is traded for existing call we sell the same call amount. So, it will manage the losses and reduce the fear of losing. Here you see the loss amount around ₹60000. But after that, all things will change. Now, we go to the option chain and search for a call with a premium of ₹680.Here we sell the call for ₹660 premium. And which delta is it? It is 44 delta. Actually, there is 50 delta in at the money call option. We almost reached that position. Now which hedge are we buying? We will search for the gap between the strike which I mentioned at the beginning Here we sell 35000 put and for hedging, we buy 34300. So the gap is 700 i.e., 35000 minus 34300. And I sold a call so I have to buy a put of 700 to make it equal. So, I sold 35600 strike call. Now add 700, so we have to buy a put of 36300 So now again, we go to the option chain of 36300 and buy the call. So our losses decreased to 24000 from 60000. So it will lie in the range of 20000, that I set for my stop loss i.e, 4% of my capital. Now, we have to fill this gap. We almost set the iron fly strategy. As I said earlier, we have to convert iron condor to iron fly. And then we adjust according to the iron fly strategy. Iron fly adjustment tells us to manage the difference between strikes by hedging the position to minimise the losses. We have only two options: either I will earn money or not get a loss. It is the rule of this strategy. Simply, I don't want to lose this ₹24000. So it will be 4% of my capital and if I want to reduce the losses then it will all be up to me how will I reduce it. So we go ahead, Now, how to reduce the hedge differences? Suppose the market will move down. So, the premium of that hedge call also decreases and delta also decreases. And if the market goes down simultaneously then the premium of call also decreases. I will be ready to lose ₹20-30 rupees. Suppose I buy this hedge call around ₹379, and if the market goes down then its value also falls to ₹150. And then I add ₹30 more and buy a hedge call again for ₹180. But this is a near call so the difference between sell and hedge reduces and for that I only take a risk of ₹30. By giving 30 points, I reduce my loss of 200 points. So basically we reduce by 200 points and try to lose only ₹30-40. Ok! So when I show practically, then it clears more. So,we start from here.We are around 3:00 pm.Next day, market goes down but our losses are reduced from ₹4000 to ₹2000. So it ain't no worries. Full day is going on as it is. I do this because we have to see the market at 9:00 am and 3:00 pm. At 3:00 pm, we are getting a profit of 3000. If you see, the market went down drastically and we lost below 1%of our capital. And even now, the market went down but we earned profit. You will learn how to manage the losses and don’t panic. Now let’s check the move. It is that move. We made our strategy on 29. And the market went down from 36700 to 35600. That means it went down 1000 points and we also thought that. So, the market went down 1000 points but we gained 3000. This is for the confidence purpose that if the market falls by 1000 points then you can manage. It is easy. Let’s go ahead, we have to watch if the market has a gap opening then what happens? If there is a gap up then we don’t lose anything but if there is gap down then we lose ₹2000. At 9:30 am, the market went down to 34000 i.e, 1600 points and our loss was ₹800. So, I want to teach everyone that if you lose ₹800 then you don’t worry about that. Even if a person has 5 lac capital. Now, let’s see what opportunities we get. Our hedge premium went down at 112. So, I will try to save my call side area. So, first I book that trade. And now we checked 200 points up i.e, 36100. And it is traded at 136.5 which is ₹20.And it is fine for me. I can give ₹20 to recover the 200 point loss. Now will you find that?You checked the loss of call side, we lost ₹24000 as we focussed only on losses.So how much loss we get after this adjustment is the main point. So let’s buy 200 points above i.e.36100 by paying 20 points extra. So we reduced our losses to ₹2300 from ₹24000. And we pay ₹20 extra, where will it be added? It will be added to the down side. So you see it will increase to 27000 from 24000. But I maintain my stop loss range between ₹20000-25000. So, I didn’t bear huge losses. So what will we check? We check that the market goes up and I will manage to recover my losses on the put side.So, we will wait to recover the losses. So, let’s go ahead.You check the loss amount, we only lost ₹200. See market went up and we earned ₹3000 as profit again.It will move like that when market falls down. So, if you see the market went down by 1700 points but we earn profit.It is good for retail investors. So, we are happy as we earn profit. We checked at 3:00 pm, everything is fine Ok but this adjustment will not occur at 3:00-3:20 pm? I have to do intraday. No, you can do it in 2 minutes. You can do this adjustment at 3:20 pm and 9:45 am. You can do intraday until 3:24 pm after that it will be closed. And 24 minutes is enough time to adjust the trade Now, here you’ll see that market took entry towards inside, I’d a profit of 3000. And see the market is going towards up, now what will I do? I got a chance to take the Put up because my loss is 27000, and I wouldn’t bear this. So I need to lessen this 27000. Now where we’ll go? The Put’s area, the Put we bought 34300. In this we’re making a profit of almost 39000, so I’ll book this and drag it a little upwards and try to balance it. So I booked it first at ₹551. Now, I want to drag it upwards so So if the price is very high, say ₹500 then you can’t drag it much upwards. Why? Because the market’s direction is this only and so its Delta will be high. How much premium did I pay on Call? ₹20 extra. Here, it may go up to ₹50-₹70. But what’s the need? Why are we going up even If we’ve to give ₹70? That’s because I don’t want to incur a loss of 27000 and thus I’m ready to give that extra amount. I don’t want that loss. I’ve come here to explain how not to pay for losses. Now we’ll buy for a little higher amount from ₹551, and we’ll take down the loss of ₹27000 under ₹20000. Now we go to the Put side. It was 34300 Put at 551 Now if we drag 100 points up then we’ve to give 587, which is 37 points. And 34500 at 629, which is almost 80 points for 200. So this is high. And thus we’ll drag it 100 points up. And we’ll check, where our loss of 27 reaches. It reached exactly 19000. Our work is done at 100 points. If we’d have taken it 200 points up, then what would’ve happened? It might have reached 13000. But why we’d pay that much? Because the main point is, how do you see the market? I see that the market goes like this. The market goes like this also but it needs some news, events, pandemic scenarios, or war, otherwise the market goes like this. Till now 9 days have passed in this trade. The market has gone like this. So what will I expect? That market will bounce a little. So we’ve to trade like that, we’ve to trade according to our set mindset. If I’ll think daily that the market will gap down and down, then how will I be able to trade? So we’ve to keep this in our mindset that the market goes in a zig-zag format. Now, let’s move ahead. We’ll see what’s going on at 3 pm. You’ll see that we’re getting it at around 3000. No worries. Next day in the morning, it’s almost ₹5000. We’re still getting1% and we’re down near to almost 1200 points. Many people have an appetite of 2%, some have 3% for a month, 5%, 10%, and some even have 25%. I belong in 4-5%, if I am getting this monthly, then it’s good enough for me, I’ll even book this. 1% is running now. Here we’ve to check again if we have a chance because the market has gone up and that’s why we’ve made a profit. Is there a chance to minimize the loss by giving 30-40 points? So let’s check once, 34400 is 548 and it’s going about 40 points. Thus we can change it again to minimize the loss. After that, our changes will almost be over. So I’m closing it at 548. This process has to be done more in May, and if it’s a normal month then there might not be any change Like if you go back and see March, it’s like that. And at last, I’ll also tell you when not to do it. It’s very important, you should know it. It can be done throughout the year but it’s good to not do it. 12000 is here and here also. 2% risk is left in 5 lakhs, now there’s no problem in this trade. Now we’ll do it normally. Even if we’ve to make the loss highest during shifting, we’ll keep 20000 here. Let’s do it on daily basis. The market came down, you can bring the Call side near. But is there any need to change it now? The market is going down but you’re not in that loss So why’d you react? Let’s say the market falls and you’re in that loss, then panic and react but if I’m not in loss, then I’m thinking of this. So for this, I can hold it. If this would’ve gone to red, then I’d have adjusted it. But it’s not needed here. People react in panic but if there’s no panic then it’s not necessary to react. Actually, if somebody has the option strategy then they should not panic. Yes, because you’ve hedged from both sides If You know that you don’t want to take more than 2%, then what’s the tension? But most of the people open the market around 9.30 or 9.15. I’ve seen that, they have their strategy and they know there’s no loss but still would be sitting at 9.15 and looking at the chart. Nothing extraordinary would happen from the chart. 100 points up-down would do nothing to your trade. In fact, we don’t have to look at the chart We go one more day ahead. The market fell very quickly, now you’ll see that market is 2600 points down from your original trade. That means we’ve gone down by almost 5%. Now we have a loss of 3000 here We’re below 1% again. Nothing to fear. Now we’ve got a chance to bring this call down. Now I’ll shift the whole call side because now I’ll pay for the jump. I have a loss of less than 4% here. I’m okay with that. Now I’ll convert it to the profitable side because I’ve to go for a bounce now. So where is call’s buy? Here it is. It’s at ₹41 now 36100. So close at ₹41 36100. Now you see, how less is the pricing on this side. You may get the shifting at ₹10. This might seem like a lengthy process, you may have to watch the video twice but you’ll learn how to save yourself from the loss See I’ve to go 200 points up and pay ₹9. So when you’ll stay on the opposite side, you’ve to pay less. I’ll drag it 200 points up just by paying ₹9. Now you’ll see call side is fully safe, and we’re playing for bounce and see we’re still below 2000 here. Market rose, no problem. Now we’re at 2% profit. And now, I’ll also have the chance to make the loss 0. So the loss will be fully 0. And, I don’t have to think about the loss. So let’s see, where is my pricing? Instead of 590, I’m at 493 so I can drag it 100 points up. Thus, my loss will reduce more. And even if the market goes down from here, then I’ll be at loss again. This fear will end. This fear haunts people Now when I’m explaining it to you, I know there’s nothing to worry about but if a person would be doing this for the first time, then he must be in tension that if the market opens low, what will I do. I’ll incur a loss, shall I book it or not? So I’m going to make the adjustment thinking for them. Had I been doing this just for myself, I wouldn’t have done it because I know it is a bearable amount. but they won’t think this and get attached to this trade and will keep looking at it. So I’ll make the adjustment according to them. Let’s do that mistake. So instead of 590, I’ll book it at 493. And I’ll take Put 100 points up from 34500 to 34600. It’ll reduce much loss. Here we gave around 40 points, now where will these 40 points be added? Since we’ve given it on the downside, it’ll get added to the call. So the one which turned green at my time, now it’ll simply come to a balanced part like this. Now I won’t do anything to this trade. Where is my loss? It’s highest at 7000. You can look at the orange box. Which means I’m going to lose even less than 20% even if the market closes here. And if the market rises, I’ve 42000 to earn more and there’s 5000 on the upside here which I can increase. How can you rise it more? I’d drag down the call and profit would increase. Basically dragging down call means that you’re getting your buying options near to the market. So the first funda, where should we do option buying? Near the market. So you’re bringing him here to here. So if the market goes up, then it’ll come to a profit at first. For that, do you’ve to make more investments for the premium? No, we’re just rotating what’s already there. Consider, you had an investment of ₹40, you paid 50. So you’ve paid ₹9 more. So ₹9 per lot is 125*9 is maybe ₹600. That’s why we’re using half. Half of 5 lakhs, i.e., 2.5 lakhs. we have reached till 18 may approximately we are getting a profit of 2%, and we have booked our losses now let me go to the 29th, sorry, see it has dropped should I be worried? No so now I got the chance to increase my profit here, now I will give 9 or 10 rupees the 50 one dropped down to 26, now I will book something on 35 and book my profit but why are you adjusting on call? because the market is only falling down I am lowering the distance between hedge and call so in call you will get the benefit, I am also pulling it down, so when it bounces I will hit a jackpot and I have given 7000 rupees below to lose according to 5 lacs you have to keep a balance on both sides, so that you get the profit from bounce, and you don't even lose anything from the downside so from 35900 I will take 35800, 100 points are enough the 900 one is 26 rupees even if I am going 200 points above, then it means I have to give 35 this is good because I don't have to pay for anything now you will see that it has a 7% profit, here it is 10%, and here it is 1.8% loss now this is a perfect scenario, even for May if you get a bounce here then you will get a jackpot market went 2000 above and we will go down more right now 2% profit now we have approximately 2.4% profit now this is the last day and we will go there we can do it around 3 o clock it is 2 o clock, and now we are getting around 35000 it is not 5%, it is 7% with so much effort we have earned 2000 and 4000 with half a margin capital this is gross right, as a transaction cost you will have to give around 1800 even then you will be left with 6.8%, it is 2 o clock right now, you can also leave this for expiry the premium of options increase, this happens due to the volatility this May one we have done, 44, and it will go on like this done by my friend right now the market is going down, now assume that the market never goes up. If it goes down one way then what will you do, so you covered it in downside 20,000 you have to limit till 4% only and while you are earning you should not think that this is enough but if I am ending it in 4-5%, then what is the use? it does not make nay sense you just leave it and book it for 4-5 days, but if it is going on for a long time as it 10-12 days then take the whole money it became a green candle, then RBI came up with a new policy, and that will also be decided when it is slowly down I won't even get 1% content because I am just teaching, otherwise I will show futures, so what is the use? then it will be in options selling basically and practice is important, I started with 5 lots, you can start with 1 lot I really liked this, I learnt from losing 20,000 you can learn from something else we have to look for the curve, if we are not able to save money then what is the use so how was it? give yourself a thumbsup that you stayed here till the end and you were not looking for entertainment