Today what you are going to learn is how we made money by buying options. How you can make money by buying options and we are going to learn price action and momentum trading from sir. So sir we can start. Perfect. So keep one pointing mind whenever option buying is done, right?
We do option buying because many people tell me that sir money is less that’s why we do option buying. I will tell you the psychology point. If you are doing option buying because money is less, it will become very difficult. Right.
Because you should have a field that you like to catch momentum, you have to trade in short term and you don’t have to take overnight risks, if you do option selling, you don’t have to take positional, you have to finish in intraday, you like to see the price again and again. If you are planning all this, then option buying is your place.
No issue. But keep one point in mind, where you have less money, you have to increase the skill. Correct. So there are two games here, one is of option buyers and one is of option sellers. If you don’t want to become this, you want to become an option buyer, then you will have to understand what is the sentiment of the option seller, then you will make money in buying.
What is the sentiment of the option seller? Just imagine, we have learned the straddle triangle, we had a stop loss at every place, that means we are afraid that if it goes below, we are afraid, that means we have an SLA here, we have an SLA here, we had planned this, that means these are the places for option buyers.
If today the market, as I said, in the trading zone, after 12.30 or 1.30, after 1-2 hours of the last, if this level breaks, 41,200, like below, that is the place for option buyers. We have to put an SL of 50-40 rupees, we have target of 1-2 or 1-3, and if we get it in the flow, well and good. And the premium will also be reduced, because there is a lot of money.
And here you are seeing that it is trading in the no trading zone. If it has given a breakout, we can trade downwards. This is the point one for option buyer. I will tell you how I traded, which is in price action, how I planned.
First thing, yesterday’s resistance was here, imagine you have sold yourself, because so many people here would have sold in 41,500yesterday, around the closing price, 41,340 or 400, that means 100 rupees had been got.
They are sitting here with the money, if it breaks, this is the first place to buy. Like we were discussing earlier, if it crosses 41,600, it can do a momentum of 100-150, because there are Slashers. So this will be the place to buy. If you come down from here, it will become difficult, because there is resistance above and support below, so there is not much space.
Here some people’s SL has hit, how many people’s? It may be the hit of the seller; it may be the hit of the future trader. So if this SL crosses, it is a buying place. We missed this buying place, we made the trading setup.
Second, what happened, the market, let me explaining price action, the market made a resistance here, it is below, you can see 50% of the previous trend, if we consider the trend from here, 300 points,150 points correction has been done from here.
After this, the trend will decide where to go, whether it was in the previous trend or not. All these actions are happening in10.30, I told you, we have to trade from 9.15 to 10.30. We have missed the first trade from here, this momentum, after that it came down from here, after that we will see how much this candle has reversed,50%, after that it gave a similar breakout point, here we have the entry, here the SL,
you can see the price action low and low here, the last swing broke down, the upper swing is intact, the low is shifting downwards, we entered here, this fell here. How far should the target be, people become a little unrealistic in the market. Generally, what happens, we traded the target here, we had to plan 1 into 2, here we will plan 1is to 2, but we have to see where is the support, which is very important.
Where is the support here, we have already identified, this is support, so we should have the first target here? If we had the support here, then we would have said that we can take 1 is to 4,5, but if you are not seeing the support resistance, because people will either buy here or square up the position.
The market came here, we booked the profit exactly here, within 2 minutes we got 11000, within 2 minutes, we traded here, it came in 2-3minutes, it came in the exact price, we registered a little here, then it went down, but by then we had booked the position, within 10-20, it is almost a capital double, because by trading 20,000
it will take 20-30, 100 quantities to buy, that much money was used, and against that we got 10-15000, but for this you need to be very watchful, people make a mistake, the market opened, here 41800 has gone, how much will go, buy Pend keep it, we don’t have to do this, we have to wait, proper price action, and where will the seller be afraid,
if we see the screen, we will clean it a little, if you think here, if you have bought the market, where will be the stop loss, here, if someone has sold, then his stop loss is here, if he is breaking, then he is going to buy, and here the price action is shown, again buying, he broke, again buying, but when he broke, then our no trading zone was going on,
now explain this to people, why it was no trading zone, because generally what happens, in the morning hour, many people trade, support, resistance, plan their adjustment, at second, in the market, closing happens with the professional, professional closes, many people say this, if they want to trade, then they will see for 1-2 hours, where the market is going,
how much should be planned, in 9.30-10.30, after taking the trade of many people, either they are going to wait for the target, and their adjustment will go on, for this, there is no momentum for a long time, like you have seen today, here almost in 1-1.5hours, there was a momentum of 500-600 points, in the initial hour, after that, it is notable to cross 100 points, that too by anxiety, so that means, it will break, now a very good plot is being made, it was in selling,
here it is hovering, and support has been hit multiple times, here it was hit once, then it was hit once, it is continuously hitting, that means, if it breaks now, this is the place for option buyer again, here, after 12.30, we can buy options again, now your question will be, which strike price should I take, if I holder not, imagine, you are going to close after seeing for 1-1.5hours,
you do not want big profit, you want 20-30-40 rupees, hold it, you want 20-30-40rupees, like here, you want quick momentum, 20-30-40 points, you want 20-30-40 points, so you have to do it on hit the money, because you are going to leave early, if you think that the trendies big, you can get good money, the trend is clear, some resistance support is not visible, a big trend is visible, if you do a little in OTM, when it becomes ATM,
it will give you a good profit and your risk will be a little less, in option buying, there is always a fear that if you have not booked your losses wits, if there is SL here, if you cross here, it may come down after 10-15 rupees, if you do not book here, it will go to 0, if ATM becomes 0, you are stuck, because if you have spent 200 rupees or 180rupees,
it is completely over and to recover it, it will take2-3 days, so it is all about that if you can manage in 20-30 rupees, well and good, otherwise you can go to OTM and plan, if you see the trend more clear, let’s imagine that you are afraid,
so initially you can go to OTM a little, because if you have bought in 100rupees, if it goes, then it will go to 100 rupees maximum, it is all about your psychology, if your psychology is intact, I will take it out in SL 100%, go for ATM, if you are not taking it out, then the money will be over,
so for this, this is a little plan, youkan plan the strike preheat or slightly OTM, if you want to take it out quickly, you got 100-200 points, got1-2, close it and after that after 12-30, after 12-30, it is still the same, on the first day, if it is doing momentum after 12-30, chances are varied, if you get in the market, then you will get money,
so you have to keep a simple system, and one more point will tell you, and you can catch a system, after 12-30, if Bank Nifty or Nifty, either do high break or low break, you can buy an option of 30-40 rupees in the same direction, not that, by putting SL of 10 rupees, so your total risk is 20-25rupees, what will happen with this?
it will be going to be either double or triple, minimum, you have to plan that because if after 12-30, it goes down, even if 200 points move, you will get 200 points directly, because in some time, premium has decayed, hardly your strike price will be100-200 points down,
so it can be 5 times more money, it can be, this happens many times, but this will work, you will trade 10 times, it will work 4 times or 3 times, it will network every day, but if 3 times also 5 times money is happening, then it will be 15 times money,
if you get 4 times also, then it is enough, I am saying that you make a plot, where money can be made, if you have to earn money every day, you have to be very sure that where will stop loss hit, you have to reduce stop loss and withdraw money quickly, then you have to enter, then withdraw, if you want regular, so much analysis, if you do not want to do, then you can plan this on a weekly basis, no issue.
So, your momentum trading, which I understood your point till now, that is, first of all, you plan in the morning, as soon as the market opens, within1-2 minutes, correct, should it be planned before opening or where? Tell me the analysis before opening, where is support and resistance? The first thing is to check support and resistance of the previous day, right.
Correct. Because everyone remembers the price of the previous day. Everyone remembers the price of the previous day. Yesterday, there was a turnaround from here. This price is our resistance. Yesterday, the price is taking support here. This is a very good support in the minds of many people. So, these are the reacting levels.
So, we have to trade in this. Imagine, the market opens here. This is the point number one you can write. We could trade at the 5-minute breakout. Right. This opened. We could trade at 2 minutes. Breakout is up. Yes, because it is breakout plus momentum. And this is the morning hour.
So, chances are you will get a breakout. And imagine, you want to trade at the breakout. So, in the first one or two trades, in a small quantity, you can trade at the 5-minute breakout or at the 15-minute breakout. Just to understand whether the market is going or not. If it goes, well and good. If it does not go, then there will be less loss.
Because this is just a test. Otherwise, you just have to wait for support resistance. Today’s trade was very clear that there was resistance here and support here’s, this is how it is. The day the market does not understand, don’t panic, don’t trade. This is also a big rule.
Because there is no guarantee. In the market, options can give you10 times more money in a day. And it can go for a day. It can go for zero. So, it is always better. The day you do not have confidence, better don’t take trade because there is a chance of a breakout. So, the support resistance is clear here. The second thing is that the day you do not understand, don’t trade.
The third thing is that if you see resistance or support breakdown, then you can trade. But that too before 10.30, according to you. Because we chose option buying because there is less money, less timing, you cannot see much, you do not have to take overnight risk. So, the first hour is over.
Because I have observed many people, they earn profit in the first hour. Then they trade all day and the money goes. So, it is better to keep the money. Or, I follow one thing, after 12.30, see what is going on, then trade. And you are telling that it gives a good profit on expiry. The issue is that it will work on expiry day. But the issue is that we always feel left out.
If I come here at 12.30and see what I was doing. Correct. Because of this, our trade is wrong. We get psychologically affected. If that effect is not there, then the last one hour can be the best time. I am telling you my opinion. You said that the first one hour is over. I wait a little. If it is missed, it is done. I know that professionals will close the market. Perfect.
So, the direction given at that time will be permanent. This is what I do. People can do both. The first hour or the last one hour, this is a good time frame. Rather than the middle hour. But some people, if I say that I want to take trade at 12.30,some people have already taken the trade and finished it. This is a trade for them.
If you are waiting, second hour can be the best place to trade again. But, it is psychological. The price has gone 300, 500.Sometimes,the market goes 300-400 points in the first one hour. Right. So, they feel left out. How did I miss this? Correct. I will tell you a psychological point for buyers.
Don’t calculate the total overall profit. Let’s imagine that we bought it for 180 rupees. Right. The market has gone up to 800 rupees. I have booked it for 60 rupees. When it goes up to 100 rupees or 200 rupees, we calculate it. If it goes up to 80,then it goes up to 60, then 70.This creates an issue in your mind. Because we don’t know the target. It may go up to 500 or 400.This is difficult for option buyers.
Because, according to the previous analysis, they think that it will go up this time also. And then they forget the technical. They think that it is resisting here’s, they calculate the better rate. It has gone up to 50%.They calculate the better rate. But, it goes up to 300.If we calculate the higher rate, we can get this much point. But, never calculate. Whatever you get, you have it.
That’s why I said that if we calculated 360 rupees in selling, I didn’t expect it to go up to 360.I have kept 100 rupees as SL. That means, it will go up to 200.If we get it, it is well and good. It is a bonus. We will follow the flow. If we don’t get it, we will have to take out the Slavery nice.
I hope people understood the concept. Your system 3,if you want to make money by buying, how can you make it? People understood tithe issue is a simple thing. What happens generally, when you scale? I have done option buying for a long time. Many people know. The issue is, I started with 2 lakhs. I started with a capital. What now? In 1 crore capital, it will be 10-15 lakhs.
If there is a profit in that too, let’s imagine that in 2 years, the capital will be 5 crores or 3-4 crores. That’s why I am in option selling. That doesn’t mean that money is not made in option buying. This is my scalability issue. You can pull the leverage of everything to a certain level. After that, you have to think a little about the system according to your capital.
After that, you will learn how to do scalability. In 5 crore capital, you can buy 1-2 lakhs. Then it will be difficult to manage i.e. use all the capitals that I can make money out of it 100%.Otherwise, the money is in the bank and I am not able to use its, in all these places, you can utilize all the money and earn money.