Trading strategy stock option for Maximum profit on last week of Monthly Expiry

- November 02, 2020

Dear Trader & Investor

This trade is for Theta benefit

Hope you all doing well I have shared so many investing & trading ideas in the stock market this is total risk-free for a safe trading strategy like you might be aware that stocks movement are very range-bound

Depends upon stock price so here we come to the point

What we need to do

we have select any nifty 50 stock and we need to sell stock option after one week prior to Expiry

Example if we assume Axis Bank CMP is 500/- INR so we will take a 100 /- INR gap so the perfect strike price will be 400 on the downside & 600/-INR upside so we will sell

400 strike price ( PUT OPTION ) & 600 Strike price ( CALL OPTION ) at the same time but we need to be very

Care full that we should keep SL in both of 2 /- INR on both side

Example CE sold at 4 /- INR our Stop loss would be 6 /- INR max loss 2400/-INR (2 /- INR Gap)

Example PE Sold at 4 /- INR our Stop loss would be 6 /- INR max loss 2400/- INR (2 /- INR Gap)

If the lot size is 1200 then the loss would be 2 x 1200/-INR = 2400/-INR either upside or downside

(Note premium could be higher or lower) this is just an example

Do it every day of last week of monthly expiry (26 th November)

Where you find strike rate premiums so the link is below

https://www1.nseindia.com/marketinfo/companyTracker/mtOptionKeys

Strongly recommended doing only 6 or 7 trading Sessions' or monthly Expiry

Do it every day from 9.15 to 3.18 square time till expiry for maximum benefit’s just for theta befit

You can check my link below related same strategy this will give you a more clear idea

https://wiseinvesting2.blogspot.com/2020/07/option-buying-vs-option-selling.html

IMAGE sample was taken on 30 July Expiry day is below

Delta is a measure of the rate of change in an option's theoretical value for a one-unit change in the price of the underlying. Call deltas are positive; put deltas are negative, reflecting the fact that the put option price and the underlying price are inversely related.

Gamma is a measure of the rate of change in an option's delta for a one-unit change in the price of the underlying. Long options will always have Positive Gamma and Short options will always have Negative Gamma.

Theta is a measure of the rate of change in an option's theoretical value for a one-unit change in time to the option's expiration date. This price decrease accelerates as the expiration date approaches. American options Theta will always be positive while European options Theta can be Negative or Positive.

Vega is a measure of the rate of change in an option's theoretical value for a one-unit change in the volatility assumption (Implied Volatility or IV). If the Vega is high then option will rapidly gain or lose value. It is also known as Kappa.

Rho is a measure of the expected change in an option's theoretical value for a 1 percent change in interest rates. An increase in risk free interest rate increases the value of calls and decreases the value of puts and vice versa.

Volatility A measure of stock price fluctuation. Mathematically, volatility is the annualized standard deviation of a stock's daily price changes.

Premium is the price of an option and is equal to its intrinsic value plus time value.

Theoretical value The estimated value of an option derived from a mathematical model.