The Ultimate Matrix Calendar Strategy Masterclass for Options Traders

So, the strategy I am going to discuss today, sir, is a long-term position, meaning that whenever the market is above 15, you can trade comfortably and earn consistent profits. In expectation of a rise, could there be any specific event or a method to judge if it’s going to increase, or could there be any other way? So, whenever you feel that the VIX is above 15, you should shift to this. And if it comes back below 15, say 14 or 13 , then don't do it. At what number do you think volatility is currently underpriced, and at what number do you think it is overpriced? Your chart will tell you that. If you look at the IV, it has bounced whenever it reached here. When it goes there, it will touch the mean. Its mean comes out to be around 15 or 16. So, if VIX comes to 5 or 10, then there are very, very, very high chances that it will bounce back. On Tuesdays, Wednesdays, and Thursdays, gap-ups and gap-downs are relatively low. They are low. But let's assume for a second that it happens on a Tuesday. Then in that case, what would you suggest? Should we exit the position immediately or hold until expiry? No. If your loss is less than 1%, you will be...No, if the loss is less than 1%, then it's something to think about. If it is, then cut it; there is no second thought. If you wait, then... Hi guys, welcome to Dhan. Friends, today's masterclass is dedicated to you because it is happening on your request . Some time ago, in a masterclass, we invited Kundan Prajapati ji here, and he discussed an option trading strategy with very fine details—actually, he discussed not one, but two strategies —and you have given a lot of love to both of them. They have received hundreds of thousands of views and thousands of comments. First of all, thank you so much for all your love. But many of you—see, if a single comment comes on a topic, we might not take it that seriously. But a lot of comments have started coming in recently because you are watching that video repeatedly. So, one question that many practitioners have asked is that when that strategy was discussed, the India VIX value was quite low. Now, India VIX has gone up. For the last year and a half to two years, a war-like situation has been going on. For the last 3 months, the battle and war between Iran, Israel, and the US has overwhelmed everything. So, in such a case, when India VIX has risen and markets are not moving. What are some variations in those strategies that we can try? Friends, today's video is dedicated. To that very thought process . While I was talking to Kundan ji just now, he said that a strategy's regime doesn't last forever. Regimes keep changing. That is why you should not be working on just one strategy. You should have a portfolio of strategies. And today, to add to that portfolio, we will discuss how to handle the high VIX thought process or high VIX regime in today's masterclass. And trust me, based on the discussion I just had off-camera. This is going to be a very, very interesting strategy; rather, we are going to discuss all its backtest results, when to deploy that strategy, and when not to, everything. So please make sure to attend and watch today's masterclass not via mobile, but on a laptop, PC, desktop, or tablet, and watch it very patiently because this can be a life-changing opportunity for you. I say life-changing because if you find even one such strategy in life that can consistently generate profit for you across every market timeframe and market regime, it can definitely be life-changing for you in the long run. So, without wasting much time, let me invite Kundan ji, who needs no introduction. He is the founder of Trading Scholar. And apart from this, you must have seen him on many public platforms. So Kundan ji, I am overwhelmed to thank you again and I am overwhelmed to welcome you back today for giving your time and sharing substantial knowledge. Thank you so much. First of all, thank you so much, sir, for giving such a beautiful and kind introduction. I think...I don't think I am as good as you described me to be. You are better than that. No, sir, I haven't received a better introduction than what you just gave. So first of all, thank you so much. You deserve it. And it's an honor for me again to share the screen with you. I really enjoy it. I always admire your knowledge off-screen as well. And I keep reading in the comment section that such deep discussions are possible because of your questions. Thank you. It is your knowledge and your vast experience that helps us bring out something better. So, thank you so much . Let's not treat this like a public event. But yes, thank you so much for inviting me again. So, you are absolutely right, sir, that one strategy does not work for a lifetime. You must have a basket of strategies. Otherwise, if you learn one strategy and think it will be profitable in all market regimes— whether India VIX is at 10, 15, or 20 —you won't succeed. So, you need enough knowledge, experience, and strategies to adapt when the market regime changes, and for adaptation, you need different strategies. Strategies that work according to market conditions. And in recent times, you know how the last two-three months have been. Global sentiments, wars, India VIX is so volatile. In such times , short vega positions cause us problems. Whenever it spikes, short vega positions give us losses. So, the strategy I am going to discuss today, sir, is a long vega position. Meaning, whenever the market is above 15. You will trade comfortably, and there will be consistent profit. Again, as everyone knows me, I discuss zero-adjustment strategies. So, there will be zero adjustments. We will not discuss any technical analysis. We will not discuss any indicators. We will not discuss any data. We will not make any adjustments. A simple rule-based system , which will be STBT. We will enter today and exit tomorrow. That's it. Okay? It's going to be that simple, and I will also give you the backtest report for the last three months because in the recent three months, India VIX has gone above 15. It has gone up. So, the audience will know how the strategy has performed in the last three months. I was about to ask this exact question. You answered it yourself. Let me tell my viewers as well. The question I was going to ask was, as Kundan ji mentioned, when the regime changes, we should change the strategy. So, I was going to ask how to know when the regime changes? That is a big problem. But you have already answered that when India VIX goes above 15, we will deploy this strategy. If India VIX remains below 15, we will revert to the old strategy. The strategy we discussed in the previous video, you can easily deploy that. Below 15, the old video; greater than 15, we will use whatever we create after today's video. You can comfortably trade this strategy when it is between 15 and 22. All right. Okay. Before we move ahead in the video, I want to tell you about something very interesting. If you want to plan your MTF trades better and remove all guesswork from your setup, we have created a completely free MTF trading Excel sheet for you that will handle all your calculations itself. This sheet will tell you how much MTF leverage you can take based on your capital, risk appetite, stock type, and investment horizon. What should be your total position size? What would be the ideal stop loss according to trading rules, and what would be your maximum risk if the stop loss is hit? Along with this, it will also clearly show you the actual impact of leverage and the overall risk level so that you can make an informed decision before every trade. So, pause this video right now. Fill out the Google Form link provided in the description to create a copy of your free Excel sheet. And let's go back to our topic now without any distractions. So sir, we have done two videos for Dhan so far. One was the PE Ratio Calendar and the other was the Weekly HNI, which was a call ratio strategy. These videos are already on Dhan. Today we will discuss the strategies in our complete Zero series. That includes the Matrix Calendar. Right? We discussed the calendar extensively last time in the PE Ratio. But that was always contingent on a bullish market to make money. It wasn't for sideways, and you know the market mostly trades in a range. So, keeping that in mind, what we are going to discuss today is the Matrix Calendar. Okay? Now, the payoff graph will look a bit familiar as it is more like an Iron Condor or Diagonal Calendar. What happens in an Iron Condor too? We trade a range. We sell far OTM calls and puts and take hedges. We are doing something similar here as well. But in a bit of a calendar version. So, the VIX will automatically adjust it here. Okay? When to do it? We have already discussed it. Whenever it is above 15, you can trade. Or if it is an event month, let's say the month of January, where your expectation is that IV will increase, then you can do it. Any upcoming event, let's say election results are coming up. If you feel that IV will increase, then you can trade. Avoid the day of the event. Let's say, for example, if we talk about January, our budget comes out on the 1st of Feb. So, before the 1st of Feb, you can trade in the two weeks after the 15th. Don't carry it over on the 1st of Feb because it's an event day; there's a huge gap up or gap down. So, the IV gets crushed anyway; the IV goes up and then comes back down. And, well, it becomes a bit risky, so you should avoid event days, but we can utilize the increase in IV before the event in this strategy. Right. So, primarily, we will use this strategy when either our VIX is above 15 or there is an expectation of the VIX rising. Regarding the expectation of it rising, is an event the only way to know, or can we judge it in other ways, or is there some other method? Like, for instance, a war. Right, or suppose your index was trading, let's say 2 to 4 months ago until January, at 10, 11, or 12, right? Then suddenly it starts going up, so whenever you feel that the VIX is above 15. Then you should shift to this. So, it has already come into the 15 range, meaning it has increased, right? So, you trade it. It’s not about whether it will rise further if it hits 18. Right, it is in the range where you can deploy it. Then, if it comes back below 15, to 14 or 13, then don't do it. You should stick to the weekly [strategy] we discussed, which is short vega positions even at 15. Meaning, should we set a band, like if it goes above 10 %of 15, say 16 or 17, then start, or close it if it comes below 13 or 14? Yes, close it below 13 or 14, and you can start trading it when it reaches 14 or 15. There is no issue with that. By the way, this is a completely off-topic question: if a trader is very good at technical analysis, can they figure out on India VIX that it is currently around 11-12 but is about to rise from here? Suppose they have applied their technical indicators, although I know you don't prefer them, but they have applied them anyway—our Dhan viewers are very smart. They use technical tools quite extensively. So, now they have applied some EMA setup or something and they feel it might go from 12 to around 14. The VIX is rising but it is below 15. Otherwise, we should not deploy it. Do not deploy. Because we won't get good premiums. In this, the hedge we are buying, let's say we are buying a monthly hedge. And the one we are selling, we are selling a weekly one. So, the combination, the calendar payoff graph won't be good. The payoff graph where we get good credit is only if it stays above 15, then we will get good weekly premiums. So, can I say that the VIX rising is less important? The VIX being above 15 is more... Is more important. Okay. Okay? Perfect. This is it, sir, this is Himanshu Sir's specialty. Nobody asks this. No one asks this. But yes, you cleared it for the audience. Okay? Now let's discuss the rules of what the strategy is. So obviously, we will trade in Nifty. Okay? Duration is one to two days, there is a 99%chance that we get our target in one day. The target is achieved in one day itself. Wow. A 1%target will be achieved in one day. Oh. One day, just took the trade this evening. Next morning 10: 00-10: 30, I mean, it will surely come by evening. But this is not a daily strategy. No, only on Monday. Only Monday, yes, otherwise we wouldn't earn every day. No, we have to place the trade only one day a week. Let's stop the podcast and talk first. What exactly to do, brother? No, we have to place the trade only one day a week. Okay? Okay? So, we have to keep it for one day. In any situation, if your trade is exactly in the center and you are making a 0.5-0.6%profit, then you can hold it overnight. But if it has moved away from the center, and in the evening, meaning at 3:00 or 3:15, you are getting 0.5-0.6%profit. If the target is not hit, then you should exit. For example, let's say the market is at 25,000, I sold a 25,500 call and a 24,500 put. Now let me tell my viewers that you don't need to think so much right now. He is just giving an example . We will discuss in detail which call and which put to sell exactly in the strategy. Right now, it is just an example of when to do the strategy and when not to. So please listen to things very carefully. Correct, sir. So, suppose we took the trade overnight on Monday, and on Tuesday evening it is still in the center. It's around 25,000 . So, if our profit is running at 0.5 or 0.6, we will hold for one more day. But if it has moved 200 points up or 200 points down, we won't hold overnight because we don't adjust this. So right now, let's say it is already 250 points down. If there is a gap down tomorrow, we will face a loss. Or it's already 200 points up. If there is a gap up tomorrow, we will face a loss. So the profit we made will also be gone. So, only if it is in the center should we hold it for another day. Otherwise, the target is usually reached in one day. Like, whatever we back... You are about to explain what the center is, right? Yes, I mean I will explain the strikes in between and what that is. Okay? We will trade two expiries. One is weekly and one is monthly. Okay? When we discuss the way of the graph, I will explain it. So sir, the entry day is Monday. Okay? You have to enter at 3:16 . Irrespective of where the market is. Irrespective of what the market direction is. Bullish, bearish, or sideways, it doesn't matter. We have to deploy this position on Monday at 3:15. Because our expiry is on Tuesday. No, we will trade the following Tuesday's expiry. Oh, I see. We won't do the next one. The one that is tomorrow... We are not doing tomorrow's expiry. We are doing next week's expiry. So, if for a second we assume Nifty's expiry shifts to Wednesday next time. Then we will build this strategy on Tuesday for the following Wednesday. It is an 8 DTE trade. If you understand , 8 DTE means we are deploying the trade 8 days before expiry. So tomorrow , if the expiry shifts back to Thursday , we will deploy it on Wednesday. We will deploy it. But for the following Thursday. For the following Thursday. Okay? So, we are building the strategy on Monday evening at 3:16. For the following Tuesday's expiry. But we will exit on the very next day. There, the chances are high. Yes. Okay. 99%chance. 99%...there are rare situations where we have to hold for an extra day for one or two weeks. Otherwise, it gets done. For this, sir, we need to keep a 1% target on the deployed capital and a 1% stop loss. Okay? We will maintain a 1: 1 ratio. If we take a trade today and hit a 1%target by tomorrow morning, close it. Do not wait even a minute extra. If the 1%stop loss is hit, don't make adjustments or have second thoughts, just exit the trade. Simple. Okay. Alright. Booking losses is quite difficult. Sir, I always say that the simple formula for making profit is booking losses. The day you learn to book losses, profit will come in option selling because the probability is in your favor. What is the problem? You can even make money by selling a ₹ 10 call or put. The problem people have is that they hold that 10 until it becomes 50. Hmm. If you are selling at 10, cut it at 20. Hmm. On other days, you were anyway letting that 10 go to zero on expiry day. If it goes from 10 to 20 that day, just cut it at the stop loss. That is exactly what they can't do. Hmm. You have to follow the system. If there is a wound on your finger and it is infected, and the doctor says to cut it off, if you don't, the whole hand might need to be cut. It’s festering. So, it is a simple matter. If you book losses, most option selling strategies have a high POP. Even if you are doing an Iron Condor, if you follow a rule that you will wait for a 2%target, and I will always book the 2%stop loss, Hmm. then even a simple strategy will become profitable. Take care of your losses and the profits will take care of themselves. It is simple. Okay? So, these are the rules. Right? There is just one exception to this, which I found after backtesting, that most of the time when I backtested, I saw that if there is a holiday on Tuesday and we deploy the trade on Monday, then when the market opened on Wednesday, we incurred losses , and this happened four or five times in the last year of testing. If there is a holiday on Tuesday. Yes. Okay. And why do you think this is happening? Maybe whenever I have noticed that Tuesday was a holiday, there have been large gap-ups or gap-downs on Wednesday . That has been happening over the last year or two. So, I have kept it as an exception, since it happened in most cases, you should just avoid it. Yes, we will avoid it. But if there is a gap down, I think the VIX will increase. Yes, if there is a gap down, a point arises there as well. If there is a gap down of 200-250 points, the VIX won't spike that much. I see. But if there is a gap down of 500-800 points, a big gap down, then the VIX will spike a lot. Then it will easily handle this trade. Then it will handle it easily. Not profitable. Well, profitable then. We won't mislead anyone wrongly. We. It will handle it compared to other strategies that are short vega, like let's say Iron Condor, so in comparison to that, it will give less than half the loss. Okay. So it's better if IV spikes for us, but this happens sometimes; there is a gap down of 200, 250, 300 points and India VIX doesn't spike that much, so it won't be able to manage it and there will be losses there. Look sir, losses do happen. No strategy is foolproof. If anyone says there is a 100%foolproof strategy without any loss, that's not even needed. Because those are fake strategies, those are fake thoughts. The main purpose of our masterclass is that whatever a trader is using to make some money. They aren't becoming millionaires. We don't want anything like that. But something that is making them money, and reducing their losses. You are just coming to our platform and discussing this. Our. So that is it, what is right, we will tell as right. Whatever flaws there are in a strategy, we must mention them so that your audience, the Dhan audience, can watch, understand, be aware, and practice accordingly. And perhaps some viewers are so smart that they noticed things like, if VIX rises, Iron Condor doesn't work or some such problems occur. There are some people who will tweak it with their own logic and thought process. Because everyone has understood these things. So by tweaking it, perhaps they can make it even better. And our viewers do come back to us as well. Sometimes when I am on YouTube Live, they tell me, "Sir, I tweaked this thing in your strategy." It is benefiting me, which I myself hadn't done in it. So look sir, everyone's thought process is different, right? And I always say this in all the videos, all the podcasts I've done so far, whether anywhere, I always say, whatever things I am telling, zero adjustment. Take it as a concept. We. Nobody online was talking about zero adjustment strategies back then. I started talking about hedging. So, you have ratios, call ratios. So people now realize that call ratios can actually be done with zero adjustment. So, I am doing 1: 2. You do 1: 3. Suppose I am doing weekly. You do monthly. You do it on the put side, or the call side. Do it by keeping a hedge nearby. So, you will have to evolve. Copying someone else won't give you conviction. When you use your own brain , backtest, and forward test yourself, then you will get conviction in that strategy and be able to scale it. Right? So, my motto is always to share concepts. And whatever rules I follow, follow those, but you should also use your own brain to backtest and forward test and tweak the rules slightly; for instance, what we discuss today, we will sell 23 delta, you can do 2, 5, or 33. Depending on your risk and reward expectations. Yes, so people must use their own brain and common sense; don't blindly follow anyone in the world. So, until now we have understood that we will use weekly and monthly expiries . We will create the strategy on Monday at 3:16 PM. Most likely by Tuesday. We will get our profit. Otherwise, we will exit it on Wednesday. Whatever the rules for that are, we will probably explain them as well. If there is no profit or loss by Wednesday, we will talk about what to do then. And 1%is our stop loss and 1%is our target. This is what I have understood so far. Yes. So, that is all I have understood. Now let's talk about strike selection. We have understood the rule that we have to enter on Monday at 3:16. Let's discuss which strike to choose. So, I would like to tell you with an example. Let's say our spot is 22,300. Okay? First, let's discuss the call side. So, what do we need to do on the call side? Sell 23 delta. Wherever the 23 delta is on the call side, we need to sell two lots in the weekly expiry. Weekly as in, we just discussed that if it's Monday, we don't do the next Tuesday. We have to do the Tuesday after that. 23 delta, now there is one more thing to pay attention to. Avoid the 50 strikes. Kundan ji, you have written 023 delta here. Yes, yes. Or 23 delta. It will be 23, sorry, yes, 23 delta, correct. We have to sell two lots. So we have two lots for the next expiry . Call side. We sold a 23 delta call and we sold a 23 delta put. Sold the put. Weekly. Weekly. Okay? Look here, the market was at 22,300, so we are getting a 23,100 call , almost 800 points up. We will sell two lots of that. I have just taken this as an example. So, look here, we sold 23 delta. We should not do the 50 strikes. Let's say it's 22,300. You are getting 23 delta at 500 points above, at 22,850. Okay? So, either you go to 900 or you come to 800. Should I go to ₹ 900 or come to 800? What is preferred? Preferred is if the premium is very good. Let's say the premium is above ₹ 70-80, then you do it at ₹ 900. But if your premium is ₹ 60, then you come to ₹ 800. Okay. I mean... More than...how is the VIX? If the VIX is very good, then you must be getting good premiums. Then you can go further away as well. Yes. I mean, consider it like this, if the premium is more than ₹ 70, then you shift 50 points above. But if you are getting a premium of less than ₹ 70, then you shift by coming 50 points below. So, basically, I need a premium of around 70. Yes. 70 in both. Yes. Okay. Okay. This is clear. Now what do we... I have a question here. I am so sorry, that's why I like doing sessions with you because you deep dive so well. My question here is, let's assume the VIX is running at 22. Running at 21. We have forbidden going above 22. Now, here I am getting 80 points even at 15 delta. Or getting 90 points. That is also possible. Absolutely. So what should I do? Should I stay at 23 or go for 70-80 points? No, I should sell 23 only. 23, because sir, we don't just have to sell, we have to buy as well. So the hedge we buy will also be expensive. It's not like the 23 we are selling is expensive, meaning we are selling expensive premiums, but the debit we are taking in the monthly will also be expensive. So 23 delta, but the premium above 70. Yes. Okay, okay. After that, we have sold two lots in the weekly expiry. But we will buy the hedge 500 points away, 500 strikes OTM. One lot in the weekly expiry, meaning 500 points away from the expiry we sold in; we sold two lots, so we need to buy one lot, both on the call side and the put side. Okay. In the weekly. In the weekly itself, so this becomes a partially hedged position; you sold four lots in total and bought two lots. Until we buy those remaining two lots, it's partially hedged, so the two lots we will buy, sir, we will buy them in the monthly expiry. In the monthly expiry. Only then will it have the calendar feel, the calendar feature in it; so, what we buy in the monthly, we buy the same sold strike in the monthly expiry. Oh, not the expiry, not the strike that I bought in the weekly. The strike that I sold in the weekly, that same strike I am buying in the out-of-the-money monthly. So, it means the options I am buying, both their strikes are different. The monthly one and the options I sold have the same strike. Same. The strike we are selling in the weekly, we will buy that same strike in the monthly. Interesting. And the hedge we are buying in the weekly is 500 points away. So, let me try to understand. The spot is trading at 22,300. Here, I sold a 23 delta call option. Two lots. Two lots. I sold a 23 delta put, two lots, correct. Now, I didn't sell the 22,800, but let's assume the 23 delta was sold at 22,800. So, I bought one lot in the weekly at 23,200 or 23,300, but for the 22,800 call I sold, I bought one lot in the monthly. One lot. Got it, got it. So, of the two sold legs we have, one leg is like a calendar. A classic calendar is being formed. And one leg we are making a credit spread. If you go into the combination—I know you go very deep—that's why, one is my bear call spread here and one is my calendar here. So, basically, on the call side, I made two, and on the put side, I made one bull put spread and one put calendar. Amazing, amazing. And the calendar is monthly. The calendar is monthly. Right? So, there is no confusion now in strike selection. Let's try creating it once. Sir. Let's try creating one, and I'd like to ask all our viewers to either open the Dhan OT app or the desktop version, or have a pen and paper ready, because, honestly speaking, the strikes here are a bit difficult. So, it's great that Kundan ji is practicing. No, it's not a problem if it's difficult. But there just needs to be some clarity. I have tried my best to keep it very simple. No, no, no, you are keeping it very simple, but we aren't that intelligent. Oh sir, someone like you... Now you are embarrassing me. Okay, so this is our Dhan OT platform, the Option Trader platform, it's a very good platform; I personally use it for live execution, and fortunately, it's Monday today. Okay, so even though we are shooting at 12:00, the trade we need to take is at 36. Right. Right, so let's try creating it and see how it goes. Okay, so we just need to go to the option chain, and sir, today is June 1st. So, we won't look at the June 2nd option chain. Okay? We have nothing to do with the next day's option chain. Yes. And let me clarify here that we are showing this to you only as an example. Kundan ji has no intention of making any recommendations. Neither any strategy, nor any stock, nor any index. There is no such purpose. Things are being discussed only from an educational point of view. So, try to understand it from that perspective. I mean, it's not like that. I am not saying you should go and do this. We are just understanding how to execute the strike selection we discussed in a live scenario and what its payoff graph looks like. Okay sir. So, we won't do anything on June 2nd because its expiry is the very next day. Its premiums will be almost zero. So, we will come to the next expiry, June 9th. Now, let's assume for a second that it is currently at 36. Yes, let's assume that. 36, so the best part here, sir, is that we can also see the Delta on the OT platform. Right? So, we will come to Delta. Now, we will look at where the 23 Delta is trading here. Look here, this Delta is 25 for 37250, and below that is 22 Delta. Okay ? Okay? Yes. Yes, okay. Yes. So, in this, we will choose 37200 because it's 22. We will sell this. We sold it here. Okay. Similarly, on the call side, we are getting 23. Let’s look at the premium for 24. A premium of ₹ 92. The premium. Okay? Yes. Now look here, 233 is coming at 2410. Hmm. Okay. But this is a 50 strike. So, what did we say earlier? Not to do this strike. It won't work. Now look at the premium here, sir. How much is the premium? ₹ 42. ₹ 42. It’s cheap, low, inexpensive. So what will we do? We won't go too far . We will come a bit closer. Hmm. Okay? So instead of 42, we’ll come to 24100, which has a delta of 0.25, and we’ll sell it. Okay? We sold it. Now, sir, let’s make it two lots each first. I was about to say the same, that we need to make it two lots each. First, change it to two lots each here. This has become a strangle, sir. Okay. I am able to remember a little bit. Now Yes. Okay. Now the next week’s one No. Now we have to buy one lot each. Have to buy. 500 points away. Meaning the next week’s, i.e., 9th June, is what we have to buy here. What did we buy and sell, sir? 23200. So 500 23700. One. One lot. We will buy one lot of this. And above, we had sold 2400. One. We will buy 600. Yes. I hope it’s clear up to this point. There is no confusion at all. Okay? Now, if you see, it’s partially hedged. If I make it two lots, let’s say if I make this two lots as well and this two lots too, then this is It will become an Iron Condor. This is an Iron Condor, but in an Iron Condor, the same short vega—as soon as the vega spikes, it will burst, and it will cause you losses. So we will keep it as one lot each and layer it with a calendar. We clicked on 'Add New'. We will come to the monthly expiry. Please make sure to only go for the monthly expiry. Don't experiment by selling on 9th June and buying on 16th June. You have already tested it. Yes, that doesn't work. Illiquidity kicks in. Slippage will occur. You won't be able to scale. Monthly expiry has decent liquidity. So you will be able to scale easily. I am profitable, and whatever strategy I discuss, assume that I have back-tested it first before sharing it. Hmm, okay? So it doesn't work in weekly, sorry, bi-weekly. Should I always keep it monthly? Okay? Okay? Even if the premium is expensive, don't think it's too high. You should prefer monthly contracts only. Sir, we had bought 23,200. Sorry, we sold it. Right? We are selling the same strike. Right? Similarly, we did it here. We had sold 24,100. Let's buy 24,100. So sir, your payoff graph will look something like this. Now, it feels like live MTM is running here. Hmm. Prices are fluctuating. So we started seeing a loss of 1500, 1400 because it took us time to add the strikes. Hmm. Whenever we Are you seeing the loss for a second? It is this, sir. Oh. On the "Today" section. Oh, the blue line for "Today" has dipped a bit. Yes. Generally, it remains balanced, but notice one thing here—our put side strike is a bit closer, and the call side strike is a bit further away. Okay, so in this condition, you can do this: look at the put side, and also note that the call side premium is ₹ 50, while the put side premium is ₹ 92. So if you feel that you are too close, because the spot is trading at 23,500 and you sold 23,200... And the premium is very imbalanced. A ₹ 90 premium, whereas we were discussing 70. I was about to ask this same question, that can we do this? The testing you have done is correct. If we test this or figure this out, if we keep both premiums around 70-70. Then is there any problem? You can do it. If you feel that by backtesting this, you are able to get good results. If your backtests are showing good results, then try it. But I have made profits whenever I sold at 23 delta, which is why I do it this way. No, we will go with your point; take this as a concept. Well, undoubtedly, there is a slight tilt towards the left. We see a tilt towards the put side. It's slight. So in such a case, you can reduce its delta slightly, or reduce its premium. But for now, we... Generally, you should trade it as it is . But you are a bit conservative right now. You are just starting out. So in that case, if you want, you can move 100 points away. Hmm. There is no harm in that. It will become a bit more balanced. Yes, this is looking a bit better. Okay. Here, look at the premium, we sold at 57. We bought at 50. We The premiums have also almost balanced out. So this is something which can be done, but the scenario we are getting right now, sir, it doesn't generally happen. If you look, I am just comparing it for you. One minute, here you see where our call side strike is. Our call sold is at 2416. It is 600 points away. That is its premium, and here it is very close for us. 23200, that premium is 74. Hmm. It generally doesn't happen, but we will trade this. Okay? If you, because the 33 delta I am telling you, I have back-tested it, so I am telling you. If you want to make even slight changes, I would advise you to back-test it first. If the rules you define look good in the back-test, then you can start with one lot each in forward testing. You can practice. How much margin is it showing, brother? In this, sir, the margin will come to around ₹ 1.90 lakh. Okay? Roughly ₹ 2 lakh. So, the profit you will get, sir, the next day will be around ₹ 2,000. Okay? Now, a lot of people comment that sir, the brokerage is going to be very high. In this, my ₹ 200 will go into brokerage. Now understand, option selling, sir, is not something to be done with ₹ 2 lakh. Hmm. If you are doing option selling with less than ₹ 10 lakh, it means you will not be able to make money because 2.5%returns are generated. If you are doing it with ₹ 2 lakh or ₹ 5 lakh, and it makes 2%, what is ₹ 10,000? ₹ 10,000, it's better to just get a job somewhere. If you have decent capital, only then will you be able to do option selling well. It is very good for learning. If you want to learn, then bring only ₹ 2-4 lakh. Practice for 6 months. Practice for 8 months. You test strategies. Forward test them. Build confidence that yes, I have built this setup and I am doing it with just one lot. But I have been doing it for six months. And slowly increasing the capital in it . So make it from five to eight, eight to 10, 10 to 15, but as many people think that options trading is very easy, that I will do it from my phone, I will do it while on a trip, I will do it while roaming around. Fancy things are shown and they look fancy; I have seen your own trip videos where you've placed trades. That was an algo trade, sir. Yes, so I wouldn't say you can't do that, but that should not be the aim; it's not like you should get carried away. That was my algo, okay? The screenshot you saw was an algo. Plus, my team is there in the background. There is a team of four people monitoring the trades. I am just tracking them. And with algos, it can be done, but you can't do manual trading like that. I would say if you want to trade manually, first practice it in your normal life. Even if you are trading manually with one lot, 10 lots, or whatever you want, then you can go anywhere. Whether you are going to Manali or Lonavala, you can do it. But that shouldn't be the aim of being fancy. Fancy things do not make money. Yes, if you already had a position and had to go somewhere urgently. You can track it and manage it. But it's not like we are just traveling and trading. So, that is not sustainable. Yes. I mean, I feel that even if it is sustainable, I would say a little something here. Whether it is sustainable or not. That is a different question. Everyone will decide that for themselves. I am saying that should not be the aim of it. That I only want to earn money in a fancy way. I only want to earn money by setting up 50 screens. Plus, I want to earn money while traveling. These things take time to happen. Think about all these things. Why did I thank Kundan ji so much first today? Because the strategy he is discussing in front of you today, this strategy has come about. Kundan ji has come directly in front of you. But I can tell you without asking that there are 50 strategies behind this. There must have been 50 failed strategies. Which he must have tested and didn't get results . Then, in this particular strategy, you must have seen some conviction. Then you must have tested 50 variants of this. So after doing 200 or 400 of these, the strategy you have conviction in, the logic makes sense, and it is profitable, is what you are discussing with us now. Now sir, it took us six days to arrive at this 23 delta. Obviously. Because we also tried 3 delta. We tried 2 as well. We tried 25 as well. We tried 35 as well. I did five too. Like you said 23. I understood that this is a number where you have We backtest these numbers. First, we backtest for at least 6 months or a year in different regimes. For the regime we create the strategy for, we especially look at it, like India was at 15, is it working? When was it at 15 last time, was it working then or not? So backtesting happens, we can't just give you random numbers, sir. The backtest I will show now, in the backtest report at the end of the session, in 3 months out of 10 trades, only one is a loss. The remaining nine trades are profitable. So those numbers came only after so much backtesting. Even you, if you follow the same rules, go and backtest it yourself. Nine out of ten trades will be in profit. So it took us six days to reach this number, sir. So obviously, whenever we trade any strategy, backtesting goes into it. And I tell everyone that whatever you learn from anyone, don't start trading randomly from the next day. Backtest it . Forward test it with one lot each. Forward test it in paper trading. First , then come to one lot. Then slowly, when you gain confidence, understand the system. Understand the dynamics of that strategy. Then go and gradually increase. In this 23 number, if I take any number between 20 and 25, the best results might be at 23, but the rest will also be broadly profitable, right? Broadly profitable, so it doesn't become overfitting. Not broadly, even if you sell 0.2, you will get profit, but the profit will be slightly lower. Yes, and the loss might be slightly larger. Because there, sir, you are selling less premium. Yes. So it cannot balance it, if there is a 200-point gap down, the premium here will burst, and there is nothing to balance it on this side. So it is not overfitting, if you trade 0.2 as well, you will get profit the next day. Hmm. If you do 0.3, the profit will become 1.5. But the frequency of losses will increase. It will increase. It's not overfitting. There is profit even at 0.2. I am very, very sure that it won't be overfitting, but results are coming quite good at 0.3. They are coming good. There is a slight deviation on the others. Our target is... The 1%fits well at 33. We are getting that comfortably. We weren't getting it at 2. We were getting 6 at 2. Okay? So, I noticed that we get good targets at 23. Plus, our accuracy is also good. We We are getting targets at 2, but they aren't as satisfactory as we'd like. If you want to try safely, you can try at 2 as well. That is profitable too. If any strategy is profitable at 23, it will be profitable at 2 too. It will be profitable at 15. It’s just that the profits will keep decreasing. Keep decreasing. And When there is a loss, it will be big. It will be much bigger. So, we have to keep that balanced. Perfect. Okay? So sir, this is how we have to build the trade. If you want to execute, you simply build it like this first. Check all the strikes. Check the payoff graph, etc. You can place it as a market order here. I won't place it because the market time is 3:16 now. Put everything as a market order and you can execute. If you want to do market, or if you are punching it in manually after checking strikes and the payoff graph, I suggest executing the monthly options with a limit order. Right. In the weekly ones, sir, there will be good liquidity. You won't face slippage . If you execute the monthly ones with a limit order, you will have less slippage. Hmm. Yes, this has Nifty's weekly expiry. Hmm. It has Sensex's too. It has Sensex's too. But sir, there isn't as much good liquidity in Sensex monthly. That is why we only do it on Nifty. We are doing it in Nifty. If Sensex matures more in the coming one or two years. And there is better liquidity in the monthly, then you can try there too . Okay? You will be able to do it with one or two lots there. But when we have to deploy large capital, we don't get that liquidity; slippage is higher, and the ask-bid spread is a bit too wide, so that's why we do it in Nifty. Okay, fair enough. Yes, please proceed. No, you were asking something. No, I was asking what else can go wrong in this strategy, for example, like the time around June 4th when election results came out, the VIX shot up before that. Could this strategy sustain there? The VIX didn't shoot up on June 4th, sir; there was a huge gap-up on June 3rd. Yes. There was a huge gap down on June 3rd and a gap down on June 4th. We had a gap down. Okay, so first of all, as I said at the start of the session, trade during the week before the event where there is a probability of IV increasing, but on the day of the event avoid it on that day. Avoid it. So, for example, if it's the week of June 4th and I know it's Monday, let's say June 2nd, then I won't place a trade that week. Hmm. I will avoid it, and to your second question, suppose you entered by mistake. So in such a situation where IndiaVIX is already very high and the event is tomorrow, your .33 delta will be found very far away. Hmm. It will be almost 1500 points away or 2000 points away. If you don't believe me, you can check many past platforms to see how far it was on that date. Hmm. It will definitely be far. Yes, it will be far. So it will be 1500 to 2000 points away. So if I look at Nifty's 5%upper circuit at that time, that was around a 1000- point range. Hmm. That a 1000-point move meant the 5% upper circuit or lower circuit was hit. Okay? And the gap up that happened on June 3rd. That was around 3.5%. There was a gap up of around 3.5%and the next day the market fell by 8%. Okay? I was trading that day so I remember, the next day the market fell 8%from its high. Although it recovered after a few days, that was the kind of move it was. So we should not carry trades on the day of the event or the day before the event. Yes. Like we saw VIX from May to June. It increased from 14-15 to around 30-32 . Will it be able to sustain this period or will it sustain it? Because VIX is rising, right. I'm sure if I come to its Greeks, sir. Okay? Let's understand the Greeks once too. Look here, theta is positive. Sorry, theta is negative. Right? Meaning if the option decays, we will make a profit. Hmm. And if you look at Vega, that is positive. Hmm. So if IndiaVIX increases or IV increases, then this overall payoff graph will favor me instead of causing me a loss. Hmm. Now I guess we can't see this in the simulation by increasing IV, right? No, it cannot be done here. Yes. So otherwise, whenever you increase IV here, it will favor it. What happens is, it’s a calendar payoff graph, and a calendar's payoff graph is dynamic. So as IV rises, the break-evens will expand, and my center profit potential of 9700 will also increase. And my blue line will also keep shifting upwards. Hmm. So that is why it will be able to sustain. If our vega in the greeks is negative, then if India VIX rises, we will suffer a loss. We will suffer a loss. That is the reason why I call this an upgraded version of Iron Condors. Iron Condors is a good strategy. If you know its adjustments and everything, then it is a good strategy. But the biggest problem with it is when IV spikes. Nothing at all will work. Hmm. IV will spike. The premiums on both sides that you sold will expand. Right? They will explode. So in that case, whether you roll the call up or put down, nothing works. What exactly have we changed here? I mean, why do you feel this impact is happening, that instead of a loss due to rising IV, I am actually benefiting? The hedge we bought, sir, the monthly one. It has less impact on it, that is why. No, whenever we understand the nature of IV, the impact of IV is greater on long-dated options. Okay, so when IV rises, my monthly option......will increase more. It will increase more. Compared to the weekly option. Okay, then one follow-up question: why don't we just do both as monthly? If both are, it becomes a full calendar , sir. Yes. So, the theta decay effect—now understand it in terms of credit and debit. Oh, so you did this to use both theta and vega, to take advantage of both. Now, let me explain a simple example to you here. We have sold two for ₹ 90. Right? So that is ₹ 180. We have sold two for ₹ 50. That is ₹ 100. What is our total sold credit? ₹ 180 and 100, 280. 280. We have taken a credit of ₹ 280. Right? As an option seller. Right? For how much have we bought the hedge? 22 + 9, around ₹ 30. ₹ 30 here, 180, 210, and here 250. Hmm. Meaning 400, 460. Hmm. And 280, so what is it here? If I buy this as well. You asked why we don't also buy this one for June 9th? If we combine both, sir, 250 and 180 becomes 350, it would be 430 right there. Now, if I do this for two lots, it becomes 860. What is our sold premium? 280. How much would the buying premium be? 860, almost 4x, so what will happen there is that theta won't favor us as well. If IV crashes, if IV crashes, then if the 280 one drops by 40, that will drop by 60. If we are absolutely sure that IV is going to rise and rise immediately, then that calendar will be useful. Where we play on theta. That is called a classic calendar. Yes. You are creating that classic calendar, which is purely in the case of Vega increasing. We are saying you can trade this above 15. Even if IV crashes, let's say it's at 18. Even if IV crashes a bit, this will survive. Hmm. But that calendar will immediately cause you a loss. Why? Because the ratio of your credit and debit in this is not very high. In this, you have sold for 280. You sold for 460, so it's not even almost 2x. If looked at properly. Okay? 560 becomes 2x. Right. So that is why you are favoring theta as well as Vega. Half the profit taken from theta. Half taken because of Vega. We have kept the balance of Vega in this so that in case IV spikes, our monthly one will protect us a bit. Okay. I have a question here. Please, sir. What kind of black swan event could bother this? Absolutely, sir, it happened recently on February 3rd, there was a gap up of 4.86%on February 3rd. So there will be a loss, right? Because IV will come down after that. Yes, IV came down, basically if IV... And even if IV doesn't come down, if there is a 4.5%upper circuit, then this red zone you see will definitely be realized. Hmm. There is nothing you can do about it, even in a gap down, if a 5%circuit hits downwards, you will have a loss in this trade, but yes, it will be comparatively a bit less. What was being realized in the Iron Condor, in this it will be comparatively half of that, is what I am saying. Okay, so if I take the strategy on Monday, and suppose on Tuesday an upper circuit or lower circuit hits. It will happen, sir. So in this case, a loss will occur, how much loss will there be? Now sir, look at this max loss, yes, max loss is 52. Sir, my VaR is 27%. Although you see this max loss as 27%, but if you are mentioning a 5%lower circuit, then this loss will be around 30,000 to 35,000. Okay. Because this will be realized on the expiry day, this will realize on June 9th, after 8 days. This max loss won't be fully hit; it won't go to zero, and plus, if a 5% lower circuit hits, then IV will also spike at the same speed. So Vega will be favoring you. And you will get the benefit. Okay, in such a case, what would you recommend, because historical data says that the most volatile days are Mondays and Fridays. Hmm. And we are concluding the strategy on Monday itself right in front of us. That is a very good question you asked; if you backtest trades or crunch data, you'll see the biggest gap ups or gap downs happened on Mondays. Hmm. Right, do you agree? Yes, yes. The second most volatile days for intraday are Fridays. Do you agree? Yes. Data suggests that. Yes, that is why we initiated this trade at the end of Monday. So we don't get trapped in Monday's gap up; I could have initiated it on Friday to get two days of theta decay, but I know that based on data crunching... Since we met today, you might remember last Friday, what happened during the MSCI rebalancing; there was a total fall afterwards. 500 points intraday market. In hardly 5 minutes, there was a 200- point fall. That is why we are not deploying on Friday, and we are not trading on Friday either, because the probability of opening gap up or gap down on Monday is very high compared to other days. Very high, yes. So that is it, sir; I am providing you with a ready-made strategy. It doesn't mean it's just like that, or something that popped into my head. There is a lot of backtesting and an R&D team behind it that discusses and has data on what percentage of average gap ups happen on Mondays. What happened on Tuesdays, Thursdays, and Wednesdays. How much movement happens on which day during intraday. Based on that, we build our thought process, like, since it's this much now, we can try something else around it by looking at this data. Yes, yes. So, crunching data is very important. If you trade randomly, you won't make money. In this, let's assume for a second. Although gap-ups and gap-downs are relatively less on Mondays, Tuesdays, Wednesdays, and Thursdays. But let's assume for a second that it happens on a Tuesday. So, in that case, what would you suggest? Should one exit the position immediately or hold until expiry? No, because that's an extreme case. Then Yes, I'm telling you. If your loss is less than 1%, you will wait. No, if the loss is less than 1%, then there's nothing to think about, just cut it at 1%. If it's over 1%because my orders just jumped, let's say. Yes, so you mean, if the loss is more than 1%. Let's say it becomes 2%, 4%... 27%? No, my loss is around 8%. Take the loss, sir. I should take the loss... Definitely take the loss, there is no second thought. If you wait, it will only increase. I don't mean you have to take it at 96, but by the time it reaches 17, 18, or 20, there is decent liquidity. Exit at 20. Okay, those days will come, sir, we cannot avoid those days. That is why the previous strategy , the call ratio, had no risk on the downside. There was no risk on the downside. But the thing is, if I only teach ratios every time... Hmm. Then people will say, "Sir, there are opportunities on the put side for sideways markets too." So, that's why we are discussing this. But as a trader , you have to look at it in terms of probability. That if I am making, let's say, 2.5%or 3%a month. Out of my four trades, one trade results in a loss or breaks even. I am making 3%. Let's say I made 30%in a year. There will be a big gap-up or gap-down once in a while, which isn't happening every day, sir. It will happen maybe once a year. Even if I lose 4-5%on that day at most. Or even if I lose 6%, my year-end profit is still there. And I might go back by 2 months. Or go back by 3 months. But that won't happen again and again. I remember a tweet from Dhan, sir. On the day of the gap up on February 3rd, Dhan tweeted that such days are rare. It has happened only five times in the last 25 years. Hmm. I use that tweet. Wherever I conduct sessions and teach classes, I have a screenshot of that tweet in my slides, that a broker like Dhan said it has only happened five times in the last 25 years that there was a gap up of more than 4%or 4.5%. Even with Weekly HI, I got many comments that on February 3rd, it would have been ruined. I am still telling you to go and forward test it. Sir, it was a 3.4%loss. The Weekly HI we discussed had a 3.4%loss on a 5%gap up. What is so bad about that, sir? You tell me, if you were trading an Iron Condor, wouldn't you have faced a loss? That day, everything... Whether it was a straddle, strangle, batman, ratios, or calendar, which strategy is there that doesn't give you a loss on a gap up? They all do, right? So if you are thinking that you will find a foolproof, Black Swan event-free , holy grail system, that won't happen, right? That is true. Risk will always be associated with it. Anywhere you are expecting a return of more than an FD, you will have to take a risk there. Even an FD has a risk, though, but still, think, what will happen more than 6-7%? So you think, sir, yes, sir, in this strategy...oh man, look at what the probability is. As a trader, either you don't trade at all, just quit and go for an FD. If you have come to be a trader and are trading options, you won't get a single rupee without risk. You won't even get 50 paise without risk. Just make sure you don't trade with borrowed money; the capital should be your own, which you can afford to lose, as I always say. So that is a risk management rule you have to follow; on the Dhan platform, you can pledge the portfolio you have and take a margin against it to trade, and you get that margin for option selling at an interest rate. If you have equity or mutual funds, you can pledge them. You will get the margin at a 0%interest rate. With that, you can do option selling and you can do futures trading. Option buying is not done with that, sir. So Dhan does that. Meaning, if you have a portfolio, you can start option selling. Without keeping any real money, any real cash. You can trade with virtual money. Do you think, very honestly speaking? Do you think, or let me ask it this way . Which type of retail trader should move towards option selling? Are there such risk management rules that they have to ensure are followed, that without them I shouldn't do option selling? Because eventually, this is an option selling strategy too at this moment. We have hedged ourselves, we are not doing naked option selling. But what are those rules that we have to make sure we always keep in mind? First thing, any strategy you are trading, you must have a backtest report for it. Without a backtest report, at least a year—I'm saying the bare minimum, a really weak condition, that it must be for at least one year. If you want it a bit decent, three years, and if you want to do it at scale, like if you have to manage more than 1 Cr, 5 Cr, 10 Cr, then 5 years. If you are doing anything less than this without a backtest, please don't do it. The first condition is that there must be a backtest report. Second , discretionary trading is not very scalable. I mean, the type of trading I do now or the type of funds I'm currently working with. So if I were doing it discretionarily, if I were punching trades manually, then the funds I am managing today through algos , I could never have managed. So if you want to become a big trader or you are thinking of having a full-time career in trading, then if you shift towards algos—today, there is so much AI available. Dhan has also created a new channel, 'AI and Algos by Dhan,' where you can watch my videos. So AI has made coding very easy. So you can use AI and use coding to automate. Dhan also has a platform called Strategy. Automated trading happens there. So what I suggest is that your emotions get less involved. Hmm. You must have seen many times that a stock won't go from 100 to 120 in one way. It will go to 112, then come to 105. Then it will go to 116, then come to 110. Then it will go to 120. You are describing a very optimistic scenario. Many times it will first come to 96 too. Yes, it will also go into loss. It will go into loss too. Yes, sorry, it has a stop loss, so it will also come to 96. Suppose it went to 105, you bought at 100, and your stop loss was 90 rupees. When it goes to 105 and comes back to 96, 70 out of 100 traders will exit. They just pray, "God, please let me exit at cost." As soon as it hits ₹ 100, they will just get out. But very few will hold till the target, thinking my stop loss is at 90. My target is 120. I shouldn't have any emotions in between. Hmm. So those people will exit at 120. So your strategy was correct. Your analysis was right, but because of emotions, you either booked a loss or exited at break-even. So, in a trade that was profitable, you exited at break-even, and in a trade that was in loss, you stayed with hope. So where did the profit come from? So psychology plays a very important role. So the shift I have had in the last year, sir. Honestly, before this, I was just doing discretionary trading at a good level. But to scale it 50x, I couldn't do it manually. That is why I shifted to algo. So it is not that you should start algo on day one. Even if you are doing it manually, do it on a rule-based system. Make rules. Rules that can be backtested, you must backtest them. Then forward test them. At least for six months. Do it on paper . There are many platforms. You can save your trades and track them. How is it performing? And don't just use one strategy. There should be a basket of strategies. There should be strategies for different market directions, like if the India VIX range is 10 to 13. I had backtested this strategy for that range. So I will run this in that range . If it goes to 13 to 16, I will run this one. If it goes to 13 to 20, then I will run this strategy. I was going to ask you the same question. We did a call ratio strategy. Then we did another strategy, the hedge one, and a third one was this. If I put these three in a portfolio And run all three through algo, or manually, whatever, let's follow the best practices of algo. If I follow through algo, can I track all market regimes, or would you like to add any other strategy? No sir, it won't cover everything. It won't cover everything because our call ratio strategy works better in the 12 to 15 range. Okay. Okay. This strategy here This will handle it. It will work from 15 to 20 or 22. But above 25, this will not work either. Alright, so you want another masterclass. We can definitely do that. Now, when it goes above 25-30, what I suggest is that you don't trade weekly options. Don't do monthly either. Go for yearly options. For LEAPS. The annual trades, they offer very good premiums. Okay. So, it's like if you simply sell straddles there, you will get a range of almost 3000 points. Is the liquidity good enough? Yes, sir, it is. It's quite comfortable at round figure numbers. There are some trades that run on LEAPS. I always place them on January 31st. Okay? I just place and leave it because I get a high spike on that day. A percentage of my portfolio goes into LEAPS options. So, it safely gives me a return of at least 12-13%. Okay? And it's not like I'm worried about loss today or profit tomorrow. It's not like that. It's a very slow process. Profit will also come very slowly. Losses will also happen very slowly. Even if you don't look at it for two months, you can adjust it later with ease. About 8 to 10%of my portfolio goes into my LEAPS options. So whenever the index goes above 30, that is the best option. Even if it goes above 25, that is the best option to short LEAPS. I have another good setup for this, sir . It's quite simple; you have Nifty Bees. I will just give you a brief overview. You have Nifty Bees. Buy an at-the-money put for Nifty Bees. Bought the put for annual trades. Your Nifty Bees are now hedged. Suppose you had 20 lakhs worth of Nifty Bees. Buy one lot of puts against it, and Nifty is fully hedged. If the market drops by 30%, mathematically you cannot lose more than 5%. This option strategy is nothing complex . Mathematically, you won't face a loss . Because there will be intrinsic value , sir. Right? Suppose the market drops by 30%, your intrinsic value from the put you bought will protect more than 25%of your portfolio. Hmm. Now, the put you sold, or rather, the put you bought... To protect the cost of the hedge you bought, go ahead and sell calls 3000 or 2500 points away in LEAPS options. So, the cost of the put you bought is covered by selling the call. Alright, your Nifty is now protected. No matter how much Nifty falls, your hedge, your portfolio, sorry, your Nifty BeES won't suffer any loss. In case the market goes up by 3000 points, the call will start giving you a loss. Now, if the market goes down by 3000, you will at least have a 15-16%profit on your Nifty BeES. Correct? The delta we have sold is 0.32 delta. The profit we are making on Nifty BeES is on one delta. Hmm. So even if it goes up by 3000, you will still be in profit. So this is very... Created a complete collar. Yes. So this is a very simple strategy that I recommend to investors. My students, there are a few students who are 60 years old, in their 60s. They say, "No, we have a lot of funds, but we don't want to take risks." And, "I don't want to do this daily or weekly; I want to make a decent return on my portfolio annually, meaning 15-16%, but I don't want to take risks." So I simply say that you buy a hedge and then you go... You put the put premium... Yes, like here, we are trying to see if we can get data for LEAPS options, that would be great. Yes, look, it's 29,000, sir. Right now, what is the 23,000 put trading at? 535. Yes. ₹ 535. Okay. Now I... Sell the 535 call. Now see, here the premiums have become a bit cheaper. When I saw the same thing in January, it was trading at-the-money at ₹ 800, and the call I had sold was at 29,000, sir. So the put I bought had better premiums , and that too 3000 points away. Hmm. So that's the point, timing is also right. I said do it in January because a whole year is left then. Now, six months have passed, so premiums have decayed. Right? So that is very simple. So whenever VIX increases, it's the same thing, you mentioned regime and you asked if these two strategies are sufficient, sir, I mean, that's why all these many strategies have been created. That as the market keeps changing, we will keep adapting. All rules are defined, which one to use in which VIX level and which one not to use. Like this is one strategy, Super Bull Spread . This is a LEAPS option. I am discussing several strategies in one session. Backtest them and see. Sir, whenever the market falls more than 10% after 2008, create a spread in LEAPS options. A bull call spread. The bull call spread has only had a loss once since 2008. Whenever, after 2008, from the all-time high, yes. when the market falls 10%, from the all-time high. Okay. Just create a simple LEAPS option bull call spread. I guess you'll get 11-12 trades. There is a loss in one trade. Okay. Its annual return, sir, is 22-23%. Just by doing one trade. I mean, anyone can go live and practice it. Okay? So, there are so many strategies because for different regimes, if you have 10 lakhs to trade, you will build a basket of 2-3 strategies. If you have 1 crore to trade, you will have to execute across five or six strategies. You will have to diversify. If you have a bullish position, you must also have a contra-bearish position so that no matter where the market goes, one position supports you. Sir, I have shared three strategies in one session. Thank you so much. That is your generosity. I have a question in my mind. Yes, sir. We are talking about volatility. We are talking about Vega. At what volatility number do you think it is underpriced, and at what number do you think it is overpriced? As in, I didn't understand. Like, which VIX number do you think is where the VIX is very underpriced or oversold? Then your chart will tell you. Okay. One second, let me show you on the chart as well. Simply go to indices. I mostly prefer charts with slightly higher time frames. Sir, there is too much noise in lower time frames. Okay? Simply go to the monthly time frame. You will see the levels. You asked, right, which one is cheap? Which one is expensive? A single line will tell you. Which is cheap, which is expensive? I drew a line here. The cheap one is visible. This line that I drew. The expensive one is visible. Okay? So basically, our VIX is moving between 10 and 25, 26, 27. Anything above that is overvalued. Hmm. So, when it comes down from there, that is where we... I think when the VIX is cheap, our call strategies will work there. Yes. Now, there is one thing here as well. If VIX comes around 14, then do call ratios. But do it only as long as the call ratio stays around 10 or 11. Stays up to 11. As soon as it starts dropping below 11, you shouldn't do call ratios. Because sir, the nature of IV is to mean-revert. Hmm. If you look at the IV, when it came here, it bounced back. When it went there, it touched the mean. Its mean is around 15-16. So if the VIX has come to 9 or 10, then there are very, very, very high chances that it will bounce back. It will go up. So in that condition, if you have taken any short vega position, you will incur a loss. Right? So I think we will meet again in a session where we will talk about VIX, and this is my request to you whenever you visit next time. So if VIX is 9 to 12, what should we do ? If VIX is 12 to 15, what should we do? 15 to 20, 20 to 23, and above 23? Even now I... Whether we should do it or not, this too... If it is 12 to 15, simply trade the call ratios that I have provided on the channel weekly. If it is 15 to 20 or 22, do what I am giving today. Okay. The strategies for above 22 will be discussed some other day. The strategy for 12 to 9 will be discussed some other day. Okay? Once more, I will plan a trip and we... We will discuss the entire regime of when which strategy is better, and it may also happen that at some point you tell us not to trade options at all at this time. Yes, absolutely. That is also true; not taking a trade is also a trade. I told you that as soon as it goes above 22 or 23, I don't even touch weekly options. I don't touch monthly ones either. If I really feel like I must take a trade, then I go for quarterly. I go to quarterly and sell far out ones because we get very good premiums, I sit 2500 points away. With a strong hedge. It's not even that I just sell a strangle; it's a tight hedge. I always give a lot of preference to hedges, kept a tight hedge. If I'm not feeling comfortable with that, my major money goes into APR options, and that is also simple. Let's say, at around 29, I sold an APR option ; it’s not that I will hold it for the whole year. As soon as it mean-reverts, it crashes; the position crashes by 30-40%. The profit is realized. Your premiums will have melted away. Take an exit. Free up the funds. Then, from here, you can trade the regular strategies you are doing. Okay. I don't know, sir, how well I was able to answer your questions. But I really enjoy it. It was great, and we learned a lot from you. So thank you so much. I felt that we got to learn a lot of things. And you have been very open that instead of discussing just one strategy. You have discussed multiple strategies with us. Sir, knowledge grows by sharing it. It never decreases. Correct. Correct. If you think that I will withhold knowledge and it will grow. That will also not be of any use. It will never be useful. So, you have knowledge, God has blessed you with such a mind and intellect. If you are getting such an opportunity, then give as much as you can. Sir, our intention is not to take. God has taught us the intention to only give. And I promise you that our viewers will also take it with the same positive attitude. And they will test all the things you have taught, forward test them, do walkthrough analysis, and they will come back to you with questions. And I will need some of your time. Whenever our viewers send a lot of questions, I will take screenshots for you. Please answer them. Anytime, and then our team here will answer them. Anytime, sir. Just one last thing from my side. You must have some historical backtests for this. Can you show those to me? Sir, look, before showing the historical backtest data, as I said at the start of the session, it is an upgraded version of the Iron Condor. So let's discuss that a bit first. Why is it so? How is it better than the Iron Condor? The way the world is trading the Iron Condor strategy. How is it better than that? Then I will show you the backtests. Okay? So here, sir, I have taken a case study. This is for March 2nd at 3:16. So sir, this is a simulator. Okay? Meaning, you can go and look at the backtest data in this. It is March 2nd at 3:16. Now there is one more thing. I mentioned one thing here, right, that don't take an entry if Tuesday is a holiday. Right? So, that also applies here, that Tuesday was a holiday. Okay? So, whatever loss we incur there, we will cover it in this as well. So, on March 2nd, we set up the trade at 3:16. Now, look here, sir, we sold 23 delta. And we sold 26 delta. Meaning, it was the same. And the hedge is 500 points away. It's not visible in the screenshot, but you can see it's 25,300. Down here, 25,800 is visible. So, I have taken equal hedges 500 points away. Now, when there was a gap down in this trade. How many points was the gap down , sir? 500 points. Hmm. On a 500-point gap down, we are facing a 1.7%loss. On a position of 10 lakhs, you are facing a loss of 19,000. Hmm. Okay? This is the 9:17 data. Okay? Right in the morning. Okay? Even after 30 minutes, how much loss are we having? 13,000; so the loss reduced slightly, but it is still a decent loss of more than 1.2%. On the other hand, if we were deploying the same matrix calendar. Look at everything here and compare it. The strike price visible, 233.26, is the same, sir. Okay? The strikes we sold in an Iron Condor, we are selling the same strikes. We are not doing anything different. The hedge we bought there, we are buying the same hedge. Just that we are taking one hedge in the monthly expiry. Okay? Meaning, half the hedges we kept exactly the same. We just put one hedge in the monthly one. It is the same time , sir. There is no difference at all. Now let’s look at the next slide. Sir , at 9:17, the loss we were having was 19,000. In this, we are having a loss of 16,300. Right? So compare it. The loss is 3,000 less. Sold the same strike, kept the same hedge, just made one tweak. So in case of a loss, our loss was lower. Plus, sir, the loss at 9:47 was 1.3%, which was 13,000; here, sir, how much loss is left? Only 5,100. Meaning, you are having 8,000 less loss compared to the Iron Condor. So, that is why I said that it is an upgraded version of the Iron Condor. Those who trade Iron Condors a lot. If you are doing it on lower VIX, that is a good thing. But when the VIX crosses 14-15, try it out; trust me, you will thank Dhan—and mention me too, because it’s a good strategy. I personally trade this. So, I have shown you a live comparison of how it is better than an Iron Condor. Right? Now sir, you asked for a backtest, and I keep saying this is a strategy that works well above 15. That is why I have included backtest data for only the last 3 months. Now look, see this. This is from March 9th to May 25th. In all months, and this is all backtested on 10 lakhs. In every month, there’s 10,000, 13,000; in one month there is a loss, and we even took an SL, which was only 9,700. The next day, the market opened, and we exited around 920. All other months are in profit. So, if I show the cumulative total, it's around 97,000 in profit on a 10 lakh capital. After accounting for slippage and roughly 7-8,000 in charges, you’ve made a 9%return in 3 months on 10 lakhs by trading just one day a week. We barely get 2.5%to 3%. The capital was also free. You can create other strategies. You can trade something else on Tuesday, Wednesday, Thursday, or Friday. Try something else . There are so many strategies. Build more baskets and try different things. You will find better opportunities. But yes, one thing I’ll say: whatever I’ve done, go backtest it first. That’s the first thing. Second, if Tuesday is a holiday, don't take a trade on Monday. Even in the future, if you try this. If Tuesday is a holiday, do not enter a trade on Monday. Fourth, execution becomes very important. Slippage occurs if you are trading with large capital, so make sure to backtest with one lot first. Then forward-test for two or three months. Then trade with one lot for another two or three months. Learn the execution. Then increase it gradually. This would be my advice to everyone watching. One last question. If we start your strategy on Monday. Instead of exiting on Tuesday, what if I carry it through the whole week until Friday? What problems could that cause? Yes sir, there will definitely be problems. See, when we do positional strategies, we usually don't have problems with intraday moves. Our biggest problem and fear is the gap up and gap down that happens overnight. Here I am taking a 1-day gap up. Sorry, I am taking a 1-day overnight risk. Okay? Where I am making 1%. If you look at its total credit or max profit, it comes to around 3.5%. So, if I hold it for the full eight days, I will only get 3%for the week. But to make just 2% extra, I have to take at least 5 days of overnight risk. Here, by taking just one day of overnight risk, sir, I am making 1%. There, to make 2%extra, I would have to take a 5-day risk. Which, if calculated by per-day risk, comes out to 0.4%. So it is not that beneficial. And I don't suggest it because suppose there isn't a gap up today, it will happen tomorrow. If not tomorrow, it will happen the day after. So all the profit earned will be wiped out. Okay. And again, as I said, we arrive at a conclusion after crunching all the data that taking it from Monday to Tuesday —it's not like we didn't try Wednesday. It's not that we didn't try Thursday, sir. We tried that too. But the thing is, we are making 2.5%in some weeks, but in some weeks, it goes up to 8%. Hmm. Why do it? That's it, sir. Great. Thank you so much for being very honest. And thank you so much. About what is good in the strategy and what is bad. Because everyone who creates a strategy has a bias. They have a bias toward their own strategy. But I saw that you are unbiased toward the profits and the losses that are happening. You are biased toward your rules. You are not biased toward the outcome. That's the most beautiful part . So, I believe our viewers will have many questions about your strategy. They should have, and for that, I will take your time again, and I will definitely invite you to a masterclass once more. Where we will discuss the VIX regime, as to what kind of strategy works best at what VIX. Anytime, sir, call me anytime; it would be a privilege for me to sit with you, I feel very happy from within, and if I had gone to any other podcast with this same strategy, it would have finished halfway. But when I sat with you, it went on for an hour, and sitting with you, trust me guys—I am not saying this just because you are sitting in front of me. I have done more than 30 podcasts, sir. Okay, different things on different platforms. But the host is ...well, we...we...you went so deep that I came to share one strategy, and I ended up sharing three. So it is all because of you. And your knowledge, your 20 years of experience, because of that, you are able to bring the best out of the guest. So thank you. And to the Dhan viewers, I truly admire Himanshu sir a lot; you should also mention in the comments and definitely thank him, because I came to share one strategy, and because of him, I am leaving after sharing three. Sir, thank you so much, you are not the host, I am the host, let me say, let me say everything about you, and no, I am genuinely thankful to you that you shared your three strategies and everything else, and all your knowledge , so honestly. So thanks to you and thanks to all our viewers. You have listened with a lot of patience until here. If you have listened and watched up to this point, I am very, very sure that you must have many questions for Kundan ji. You must have thoughts and you must have feedback. So please make sure you mention all your thoughts, all your feedback, and all your comments. Definitely give a special thank you to Kundan ji and also ask your questions. But whatever random doubts you might have regarding the strategies, please make sure to put them in the comments. No doubt is small or big. No doubt is stupid or smart. All doubts are good doubts. Because eventually, it is your money that will be at stake. It is not my money that is being invested. I am working on my own strategy, and I am going to test sir's strategy, and then I will start using it. In the same way, Kundan ji is working on his own strategy. All his doubts are clear. It is just your doubts that aren't clear. And this has been my effort, that all the doubts that could come to your mind , I have tried to ask them. Whatever problems could arise in black swan events, I have tried to ask about them. But I believe it is very difficult for me to think of everything within one hour. But you have the whole day today. Ever since you watched this video. You have the rest of the day. I don't know if you are watching this while driving, eating, or sitting back and watching it comfortably. Although I definitely made a request. But whenever you watch this, watch it again, and please make sure to ask as many questions as possible; just like the love you gave to the last podcast, the many questions and forwards you shared, please make sure to share this podcast and this masterclass with all your trader friends, and I will be eagerly waiting for your comments. It is my promise that I will take the time from Kundan ji for all your comments and will definitely get all your questions answered. See you in the next video. Thank you so much. Before you leave, please make sure to like the video and subscribe to the channel. Bye-bye, take care of yourself. Thank you so much. Thank you so much, sir. Thank you. Means about. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.