Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Bearish Option Strategy: Nifty Hedged Puts – Nov 2020 Series

42 sec read

Structurally Nov 2020 series is closing the long pending island gap reversal which is an investing reference. However, emotions are running high during the US presidential election event.

In-order to play the emotions one have to learn to trade against the crowded trading decisions. And the Crowd is long and getting too emotional.

In-Order to play against the crowded bets one can consider using slight ATM Puts hedged with x2 times of OTM Short calls. The thing could bring some cushion for traders to manage the theta decay in the Put Options.

Entry

Buy 1 lot of 12000PE (slight ATM Puts) – 26th Nov 2020 Expiry at 183.20/Lot

Hedge Protection

Sell 2 lot of 12100CE (OTM Calls) – 26th Nov 2020 Expiry at 206.10/Lot
Buy 2 lots of 12500CE (OTM Calls) – 26th Nov 2020 Expiry at 55.00/Lot

Total Margin Required for Hedged Position : Rs1,07.542

Nifty LTP : 12080

Strategy Breakeven Point: 12159
Exit on Nifty Closing the Monthly gap (i.e Nifty Futures testing 11600 levels)

Strategy Risk Level: Moderate Risk Level and Risk increases if Nifty starts moving above 12200 level.

Strategy Expectation : Liquidation towards 11600 levels in Nov 2020 series.

The strategy has protection up to 12150 levels. If Nifty goes beyond 12200 levels it requires exit on the hedge until then, No strategy adjustment is required.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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