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Friday, 30 August 2019

Options Buying : New Strategy testing with part time Trading.

Dear Readers,

  Here I come again as part time trader and irregular trader. I was unable to participate in full time trading due my new job roles and responsibilities at Managerial Level.
    Although the passion of trading is not letting me to stay calm. So I decided to work out for a simple trading plan which requires little efforts daily say like 30 mins.
    I was working with various segments of Futures, Intraday, Options buying and selling etc etc from past three months and back testing with historical data.

Finally I found OPTIONS BUYING is the best way to achieve our objective of part time trading and staying profitable and more importantly enjoying the trading and keeping the passion alive.

Note: Options Buying is strategy testing only. Not tested strategy. Risk Involves. Readers need to observe only not to take trades.

I made a strategy which is for options buying, set some rules by myself for discipline, Requires no technical analysis or charting experience, trading between 3 PM to 3:30 PM, Only positional.

HERE ARE THE RULES OF OUR TRADING:- (I will share complete details once the strategy become successful)

1. Option buying only keeping our risk limited (whatever maybe the outcome)
2. Buying calls for Uptrend stocks and Buying puts for Downtrend stocks (Only trend trading not trend reversal)
3. Step 1: Scan the uptrend and downtrend stocks at 3:00 PM (with my custom stock screener)
4. Step 2: Open uptrend screener, note the price (for example trading @ 100)
5. Step 3: Choose 5% OTM Strike Price CE 1 lot, meaning strike price = 100 + [5% of 100%] (Here 105 CE)
6. Step 4: Check IV to be only between 25-50 (from NSE Option Chain) and Min. 50-100+ volume if not ignore the stock
7. Step 5: Note down the stocks day low and Buy 5% OTM CE at CMP in positional not intraday (Max. risk = Premium x Lot size)
8. Target is Risk-to-Reward Ratio RRR 1:1 (Max. Risk x 2) and stop loss is stock's days low means when you check every day between 3 pm to 3.30 pm and if the stock is traded lower than noted days low then you should exit your position completely at CMP. (Current Market Price)
9. Step 6: Check open positions for targets and stop losses.
10. Step 7: Repeat same steps daily from monday to friday 3:00 PM to 3:30 PM
11. Exit all positions 5 working days before expiry at any cost. (For example exit all trades before 23rd if expiry date is 29th.)
12. If you can sneak in other market time and profit achieved/ SL touched, then can EXIT the positions, not necessarily to wait for 3 PM.

Lets see how things work out. 


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