Comment on Theta

Kiran commented on 02 Mar 2019, 12:41 PM

Hi Karthik,

As always, let me start by thanking your impeccable and selfless work. You are awesome.
Inspired by you, I was trying to build a checklist for my options trading. I have tried to make one. If you have 2 mins to spare, Kindly let me know if it is robust.

 Initiate purchases of Just OTM options either CE/PE. The prior trend of the underlying should be directional (Up/Down). The trend should be confirmed by at least 7 to 8 candles on closing basis at EOD
 The strategy is based on contrary approach. If the prior trend as confirmed by last 7 to 8 candles is Up, initiate purchase of Just OTM PE (trying to cash upon profit booking at higher levels which might drag the underlying down). If the prior trend as confirmed by the last 7 to 8 candles is Down, initiate purchase of Just OTM CE (trying to cash upon value buying which might propel the underlying Northward). This check has to be seen in conjunction with any of the indicators for concurrence. (Either Moving averages of 20, 50,100,200 days, (or) Bollinger bands, (or) Fibonacci retracement levels, (or) Pivot points (or) Double/triple-bottom/top on vanilla charts). Having initiated a purchase, always trade with stoploss.
 Check for a recognizable pattern. Highly reliable ones by the EOD are: Double/Triple bottom for Uptrend. Double/Triple top for downtrend. Hammer at the bottom of a downtrend in order to initiate long position, Inverted hammer at the end of an uptrend in order to create short position. All the data shall be checked at the EOD on closing basis
 Trade with more decisiveness if the indicators like Moving averages, Fibonacci retracement, Pivot points, long-term support or resistance are confirming the entry levels.
 Limit purchases to first 2 weeks of a series. If trading opportunity pops out in the last two weeks of series, purchases shall not be done as the time value decays very fast, eroding the premium. However if the opportunity arises in the third and fourth weeks of a series, purchases can be done for the next series.
 Having initiated a position, continuously trail the stop loss once the underlying starts moving in the intended direction.

Thanking you in advance


View the full comment thread »