Few weeks ago @Ronak_Unadkat Sir conducted an exclusive session for me & @adityatodmal to explain how he trades. He was kind enough to share all his trade strategies and was patient enough to answer our doubts. Thought of making a 🧵for the benefit of the larger audience here.
@Ronak_Unadkat Sir's Option Selling Logic 🧵: • Reversals in Intraday Option selling • Strike Selection & SL • Hedging for any Black Swan Event • Positional Option selling • Ratio Spreads • How to manage the positions • Capital mgmt In collaboration with @AdityaTodmal
How to play reversals • Always look at the chart as a starting point • Spot the Swing low • Sell Strikes 300-400 points below that swing low • Buy a proper hedge
• Example on how to play reversals on Intraday • Instead of the selling the support strike sell a bit far
• As the strike is far from the support you get enough cushion • As soon as the SL is hit, you can exit the positions • without your strike coming into ITM
• Greatest fear of any option seller is the Black Swan event • Especially if that risk plays out overnight
• Importance of hedge over buying a margin • Hedge is to protect your capital from any overnight adverse news/event - Black Swan
• How selling Rs. 45 option and buying a Rs. 15 option is a superior strategy • than selling Rs. 30 option and buying a 5 Rs. Option or • just selling a naked Rs. 30 option
• Hedging is an insurance premium paid to get a good nights sleep 😴 • And also to protect your capital from any extreme events 👹
• If hedging is too expensive for you, then here’s a hack
• Ratio spread strategy when moderately bullish & expecting a gap up
• Ratio spread strategy when strongly bullish & expecting a huge gap up
• Ratio spread strategy when neutral to slightly negative & expecting a flat to slight -ve opening
• Always important to book the buy legs first as theta works against in option buying
• Prefer to sell straddles in monthly over weekly as you have a huge range plus theta decay will work in your favour • In weekly you will be caught adjusting due to gap up and gap down scenarios
• In case of gap down no need to worry on the spreads as they are in net credit or most likely at 0 cost
• Capital management is the key • Keeping a buffer of 15-20% for any adjustments • Always be aware of the total risk of your open positions • Prefer a good nights sleep 😴 over watching SGX Nifty & Dow in the night 🥴📉📊 • Never jeopardize your capital & mental peace🤠
This was a 🧵on @Ronak_Unadkat Sir's option selling strategies curated & presented by @AdityaTodmal & @niki_poojary If you❤️this, why not share? Retweet the first tweet and help others find this 🧵 Happy learning 🤓 to everyone!