mentorship

O p t i o n s f o r e ve r y o ne
Day 4

Mindfluential Trading
 Cont e nt s
Day 1 About Options
Strike price Selections in Options
Intrinsic Value of Options
How to read the Option Chain data like a Pro
PCR & Max Pain
Understanding the Premium Decay concept in Detail
Option Selling Vs Option Buying
About Option Greeks
Q&A Session

Day 2 Plotting important levels on the chart for Intraday

Understanding Trading View Tools & How to use the free trading view version in the best way possible.
Central Pivot Range - CPR
Institutional Zones & Its Importance in Intraday
Option Scalping / Intraday Strategies
How to Keep Stoploss in Options
Effective Stop loss management & trailing techniques
Q&A Session

Day 3 Directional View Option strategies like Bull/ Bear Spreads, Ratio Spreads & Adjustments
Bullish Option Strategies: Bearish Option Strategies:
Bull Call Spread Bear Call Spread
Bull Put Spread Bear Put Spread
Call Ratio Back Spread Put Ratio Back Spread

Q&A Session
 C on t e nt s
Day 4 Non- Directional View Option strategies like Short straddle / Strangle, Iron Fly & Iron Condor etc.
Neutral Strategies / Non-Directional strategies Strong Directional Strategies (Not so Imp.)
Short Straddle Long Straddle
Short Strangle Long Strangle
Short Iron Condor
Short Iron Fly
Adjustments & Firefighting Techniques
Margin Management
A discussion on Calender Spreads - Bonus Concept
Q&A Session

Day 5 Intraday & Expiry Day Option Selling Strategies

Understanding Long & Short Build-up & Covering
Important Bonus Concepts [ Related to Stocks ]
Covered Call & Cash Secured Put
Result Based Strategies or IV based strategies
Return Expectations from the Market - A Practical discussion
Maintaining Effective trading Journal
Discussion on How our Discord Community works

Q&A Session
neut ral / n on-di r ec tion al
s tr ate gi es
 "You create this strategy when you think the stock
Short Strangle price will not go up or go down, it stays sideways"

sell a higher Call credit Strategy sell a lower put

High cost, Moderate returns You have Neutral view Re : Ri - Moderate PoP - High RoI - Moderate

Max Profit
Limited to total premium
Less if you get our early

Max loss
Very high
Nifty Spot - 17,790 More if you get out early

breakeven on expiry
You have to preserve the total premium
Exit before expiry when the total premium is less than
what you have received.
Buy Strike + Total Premium
Sell Strike - Total Premium

Capital Needed
Its more due to margin requirement for selling 2 options
 Short Strangle
Effect of variables

Stock Price

Profit decreases when the stock price moves big in either direction
Not much change for small moves

Strike Price

You can change strike price to choose Profit, Cost, Risk - Reward and PoP

Expiry

You can change Expiry to choose Profit, Cost, Risk - Reward, and PoP

Passage of Time

You earn Theta everyday

Implied Volatality

Huge P&L impact for IV. IV fall is good for you and rise is bad
 Short Strangle
Theta play
Sell strangle and buy back after few days
For eg: Perform 45 days to expiry and buyback 15 days to expiry
Perform near the weekend and long holidays near expiry
Play with near expiry and with weekly expiry

Volatality play
Sell Strangle near an event when IVs are high
After the event IVs will fall
Buy the options back when IVs fall and options get cheaper
Its basically making money on Vega
Also, make one or 2 days of high Theta
The stock should stay rangebound and not give big moves
Best for events where there is not much movement after the event
 "You create this strategy when you think the stock
Short Straddle price will expire at a predefined level only"

sell a Call credit Strategy sell a put at same strike price

High cost, Moderate returns You have Neutral view Re : Ri - Moderate PoP - High RoI - Moderate

Max Profit
Limited to total premium
Less if you get our early

Max loss
Very high
Nifty Spot - 17,790 More if you get out early

breakeven on expiry
You have to preserve the total premium
Sell Strike - Total Premium
Buy Strike + Total Premium
Capital Needed
Its more due to margin requirement for
selling 2 options
 short strangle & short straddle

Pros
Immune to small moves
Make money if nothing happens

Cons
Huge move can be damaging

Do's and don'ts

Always use a payoff simulator to know what to expect. Know P&L and Breakeven
Option value decreases over weekends. Good time for strangles
Avoid selling options at the very low implied volatility
Stay away from events if you are a beginner
Pay only in liquid options, especially straddle

Inputs
Have enough buffer to have a better range, so that small moves in the market, gap ups, and gap down will not impact much.
300 to 400 points of the premium collection is a good place to be, the more the premium the better it is.
Better to trade in far expiries. Far months are better
You may even buy a current week nominal call / put (1 to 3 Rs.) options to reduce margin slightly.
 Which one to choose ?
Strangle or Straddle?
Strangle Straddle

Can control the risk

Suitable if you are unable to track Volatility will be high
Need to monitor more
markets all the time
Might need more adjustments
Fewer adjustments when compared
Better Reward to Risk Ratio when
to Straddle because of Range
compared to Strangle
advantage.

Both have advantages and disadvantages, you can choose whichever is

suitable to you.
 Short iron "It is a Short Strangle + Buy an OTM call and put for
protection. You create this strategy when you think the stock
condor price stays rangebound but do not want to take much risk if
you are wrong"

sell a Call with strike around or above sell a put with strike around or below
current price credit current price

buy a higher strike call for protection Strategy buy a lower strike put for protection

High cost, Moderate returns You have Neutral view Re : Ri - Moderate PoP - High RoI - Moderate

Max Profit
Limited to total premium
Less if you get our early

Max loss
Nifty Spot - 17,790 Very high
More if you get out early

breakeven on expiry
You have to preserve the total premium
Exit before expiry when the total premium is less than
what you have received.
Sell Strike + Net Premium
Sell Strike - Net Premium

Capital Needed
Its more due to margin requirement for selling 2 options
 Short "It is a Short Straddle + Buy an OTM call and put for
protection. You create this strategy when you think the stock
iron fly price stays near to a strike price but do not want to take
much risk if you are wrong"

sell a Call with strike around or above sell a put with same
current price credit strike as put

buy a higher strike call for protection Strategy buy a lower strike put for protection

High cost, Moderate returns You have Neutral view Re : Ri - Moderate PoP - Moderate RoI - Moderate

Max Profit
Limited to total premium
Less if you get our early

Max loss
Very high
More if you get out early
Nifty Spot - 17,790
breakeven on expiry
You have to preserve the net premium
Sell Strike + Net Premium
Sell Strike - Net Premium
Capital Needed
Its more due to margin requirement for selling 2 options
 short Iron Condor & iron fly

Effect of variables

Stock Price

Profit decreases when the stock price moves big in either direction
Not much change for small moves

Strike Price

You can change strike price to choose Profit, Cost, Risk - Reward and PoP

Expiry

You can shift Expiry to choose Profit, Cost, Risk - Reward, and PoP

Passage of Time

You earn Theta everyday.Not as high as short strangle

Implied Volatality

IV fall is good but not as high as short strangle

 short Iron Condor & iron fly

Pros
Immune to small moves
Make money if nothing happens
Very small Theta Vega Impact

Cons
Nothing much

Do's and don'ts

Always use a payoff simulator to know what to expect. Know P&L and Breakeven
Option value decreases over weekends. Good time for Condor
Avoid selling options at the very low implied volatility
Stay away from events if you are a beginner
Pay only in liquid options

Inputs
This can also be deployed on Wednesdays for one-day trades
In short iron butterfly, strike price selection can be based on your view about the market. Let's say Nifty is at 17000 on
Wednesday and if you think it is slightly bullish and so you may select the 17200 strikes for selling both options and can have
400 points buffer as safety by buying 17400 call and 17000 put. So if Nifty expire around 17200 you can have good return.
Str on g d ir ec t io n al
st r ate gi es
 long You create this strategy when you think the stock price is
going to have a huge directional move but you do not
strangle know in which direction. It is actually one of the least
popular strategies as it doesn't work most of the time.
You need a quick and big move to make money.

Buy a call with strike around or above current price Debit Strategy Buy a put with strike around or below current price

Low cost, High returns Expect breakout in either direction Re : Ri - High PoP - Low RoI - High

Max Profit
Unlimited
More if you get our early

Max loss
Total Premium
Nifty Spot - 17,790 Less if you get out early

breakeven on expiry
Recover total premium
Buy Strike + Total Premium
Sell Strike - Total Premium
Capital Needed
Low as you are buying options
 long You create this strategy when you think the stock price is
going to have a huge directional move but you do not
Straddle know in which direction. It is actually one of the least
popular strategies as it doesn't work most of the time.
You need a quick and big move to make money.

Buy a call with strike around or above current price Debit Strategy Buy a put with strike as call

Low cost, High returns Expect breakout in either direction Re : Ri - High PoP - Low RoI - High

Max Profit
Unlimited
More if you get our early

Max loss
Total Premium
Nifty Spot - 17,790 Less if you get out early

breakeven on expiry
Recover total premium
Buy Strike + Total Premium
Sell Strike - Total Premium
Capital Needed
Low as you are buying options
 Long strangle & straddle

Pros
Huge profit if the breakout happens

Cons
Low probability of success
High loss if stock is rangebound

Do's and don'ts

Always use a payoff simulator to know what to expect. Know P&L and Breakeven
Most options expire worthlessly Do not buy options with too much cash
OTM options are like lotteries and cheap. Deadly money-losing combination
Option value decreases exponentially towards expiry. Do not hold on to them if you are losing
Option value decreases over the weekend. Be careful when holding them.
Avoid buying options at very high IV
Events such as results are a bad time to buy options and try to get lucky.
Play this in liquid options
Long iron condor and long iron fly
These are just opposite of Short Iron Condor and Short Iron Fly and are very
low probable setups and also not advised to trade in these unless you expect a
very huge move like may be on Budget days.
Fir e fi gh ting str a t egi es
Popular fire fighting strategies are
These firefighting strategies are more helpful when the trades are done in monthly expiries. Let's understand these
strategies by taking Short Straddle as an example.

Shifting

Averaging

Extension

Pyramid

Exiting
 Shifting
1. In this, you change the strike price of your positions if it reaches your breakeven points
2. For eg: If you make a short staddle / short iron fly when nifty is at 17,000 and get 500 premium your breakeven is
17500 to 16500. So when in case nifty reaches 17,500 then if the position is in profit then close it and reopen a new
position at a strike around 17,500.
3. If the position is in loss then we have to deploy Averaging strategy
4. No additional margin is needed in this case

Averaging
1. In this, you create a new position at a price that will make the position looks like averaging
2. For eg: If you make a short strangle when nifty is at 17,000 and get 500 premium your breakeven is 17500 to 16500.
So when in case nifty reaches 16,500 then if the position is in loss then open a new short straddle around 16000 so
effectively it is like holding 2 straddles at 16,500
3. However, this position will require additional capital, and 90% of the time we will not be requiring this method.
shifting would be enough
Extension

The extension basically means extending the range of your strategy ( extending the breakeven ) so that you have more
room to play with
For eg: If you short a straddle at 17500 with a 1000 point premium collection and at one point of time you have realized
that price came to 16500 (breakeven) and then you can buy a Put at 16500 and sell 2 Puts which is half the value of Put
bought, the strike could be around 15500
By doing this you have extended the range from 16500-17500 to 15500 to 17500. Now If Nifty expires between this range
of 2000 points you can end up making profits even though your initial analysis of 16500-17500 was incorrect.
This might need additional capital to execute this.
If the market goes up in the above example to 18500 then, you can buy a call and sell 2 calls
 Pyramid Strategy

Steps to follow when Straddle goes against your view [means markets moves in one direction]

When to start the adjustment ?

1st adjustment when the difference b/w Call and Put premiums is greater than 50%

How much to adjust?

Adjust with the premium which is 25% of BIG premium

What if Base trade goes against you even after the 1st adjustment
Which Basically means Call and Put premiums come greater than 50% even after 1st adjustment. This generally
happens when markets move continuously in a single direction.
You will now do the 2nd adjustment with 25% of Big premium
Now you might be holding 1 call with 3 puts or 1 put with 3 calls (all sell-side)

What if markets keep going in same direction

Here you will stop the moment market hits breakeven point (on any side) and accept the loss
what to do when the market starts reversing?
Here the new sell options that you took might start making more losses if not controlled (because sell options have unlimited
loss potential)
So we need to follow a strict stop loss and strategically exit the new sell options. You may follow the below method
If 3 options premiums equal (or near to) to 1 opposite option premium, you will exit lesser premium option out of 3
Again if the market is reversing, the 2 remaining options might come close to the opposite 1 option premium, you will exit the
lesser premium option.
Now you will be left with 1 option on both sides.
By its time mostly time will decay and sold options will be trading at a less premium and you might be in profits.
If it again starts trending, you will apply the same method again.

Lets take an example:

taking adjustments
You sold Nifty PE & CE at 17500 next month expiry collected 1000 points, say 500, 500 points for PE & CE
Your BE is now 16500 / 18500
If Nifty starts moving upside CE might go to 800 and PE might come to 400
Now the condition triggered that one premium is less than or equal to 50% of another premium.
You will sell PE of (800*25% = 200)
Now CE is 800 & PE is 400+200 = 600
Even if the market is moving upside and CE might become 900 and both PEs might be 450 (300+150)
Again do 2nd adjustment with (900*25%) = 225
 Now CE is 900, PE combined of 3 is 300+150+225 = 675
After this even if nifty moves up you will not do any adjustment and the square off once Nifty cross BE point

Closing the new options when market reverses

If market reverse and 3 CEs value may come to 700 and PE comes to 700 or less then you will exit the option with
a lesser premium value
The logic here is, your CE premium values should not be more than PE premium values at any point of time
because the reason to take additional CEs itself is to match the PE and so it should not exceed the PE
Again when falls back, 2 CE values might come to 500 and PE might come to 500 or less, then you will exit one
more CE option with less premium, and then now you are back with 1 PE & CE which are not having a difference
more than 50%.
You can continue this method if the markets trends in any direction
If the markets fall then you apply the same method and sell additional CEs

Exiting
When you are unclear about what might happen in the market and unable to think clearly or manage all open positions then
it is better to exit all of them and take a break for some time and then formulate a new strategy. But make sure you do not
exit too late when your entire trade capital is at a max loss. Fix a max threshold percentage based on your risk level and exit
once it is reached. It can be 2 to 3% of your overall capital.
m argin man age men t
margin management
It's the only thing that works all the time in the market. Nothing else works all the time. Never try to break
these rules else, it can hamper your portfolio capital badly. Even 1 big mistake can ruin everything.

Deploy only 12 to 15% in any one strategy

Choose 3 to 4 strategies max

Maintain 30 to 40% in cash

Can deploy the idle cash in Intraday Strategies, Scalping or Expiry day strategies
Averaging
Only trade in Intraday because if the funds are needed for firefighting, you need them.

Averaging
Portfolio Stoploss of 2 to 4% on each strategy is allowed
A dis cussi o n on cala nd er
spreads

A bon us c on ce p t
 call calander spread
This is is created when you have neutral view on the markets but you also think that VIX might increase due to any of the
factors that you think are relevent. May be its too now now and possibility is there it can go up.

The advantage you get in implementing this instead of normal neutral strategies is when VIX rises. If you doo not think
VIX may not rise then better go for neutral strategies like Straddle & Strangles as they can give more profit than this in
those senarios. Call Calander spread is executed only through call options at different expiry but same strike

Debit Strategy

sell a call at immediate weekly expiry

buy a call at the next weekly exiry at same strike price

 put calander spread
This is is created when you have neutral view on the markets but you also think that VIX might increase due to any of the
factors that you think are relevent. May be its too now now and possibility is there it can go up.

The advantage you get in implementing this instead of normal neutral strategies is when VIX rises. If you doo not think
VIX may not rise then better go for neutral strategies like Straddle & Strangles as they can give more profit than this in
those senarios. Put Calander spread is executed only through Put options at different expiry but same strike

Debit Strategy
sell a put at immediate weekly expiry

buy a put at the next weekly exiry at same strike price

 call & put calander spread
POINTS TO NOTE

HOW TO CHOOSE STRIKES PRICES

If your view is neutral but slightly bullish then you can choose slightly OTM CALL Calander Spread
If your view is neutral but slightly bearish then you can choose slightly OTM PUT Calander Spread

WHAT EXPIRIES TO CHOOSE

You can either choose This week expiry vs Next week expiry OR
You can also choose This month expiry vs Next month expiry

WHEN TO BEST EXECUTE IT

If you are following weekly expiries then may be Friday or Monday etc would be good, there more gap to near expiry the
more premium you can collect by selling
If you are following monthly expiry then mau be Month beginning week would be better. The llogic is same as above

WHEN TO CHOOSE THIS OVER STRADDLES & STRANGLES

If you feel VIX is too low now and can spike up in coming times.
If you feel markets are about to become uncertain due to events coming up in next weeeks etc. foe eg. RBI policy
annuncement for overall markets and Results & any key announcements for Stocks
When you want less risk as compared to strangles & straddles but also okay with less reward.
 call & put calander spread

CAN WE MAKE ANY ADJUSTMENTS?

YES
Step 1 - Calculate the Net Premium paid. Lets say 100
Step 2 - See if markets are moving beyond the breakeven ranges. Say 17640, 17975
Step 3 - Calculate half(50%) of Net Premium Paid. Lets say " Rs.50"
Step 4 - Sell 50 rupess value CALL if market breaks downward breakeven level 17640 . If market goes up and breaks 17975 the
sell a Rs.50 PUT Option.

BUT WHY 50%?

Because its a general assumption and understanding that This week expiry option even if it goes to zero, the next week
option will not go to zero may be it can decay by 50%, so your risk is only 50% here and hence we are adjusting with 50%.

WHAT IF MARKET REVERSES AGAIN

In this case when you feel markets are coming back to the range again, it is positive for your strategy because it may expire
in rangebound but the adjustment sell option can give loss so we need to close it out may be after market coming 100 points
into the range. You might br at a slight loss or slight profit also depending upon the situations. However keep a strict
Stoploss for Adjustment options say, 10% or 15% of the value.
q&A Session
 End of the Session
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Mindfluential Trading
"Knowledge is of no value unless
you put it into practice"
~ Anton Checkhov
 The material doesn’t guarantee or represent that members acting upon any
suggestion mentioned in this material will result in a guaranteed profit.
DISCLAIMER Trading the financial market has a large potential risk, you must be aware
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COPYRIGHT from the publisher. Copyright © 2021 by Mindfluential Trading
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