Options Trading Idea

An Options Trading Idea on Double Bollinger Band And Hilega Milega Trading System

As I am an experimental trader and test my strategies rigorously before implementing them with real money. Therefore, consider this paper trading and don’t implement it at all.   

I used a trendlyne screener to find out which large-cap gave Golden Death Crossover when 30 Days MA crossed below 50 Days MA. 

After going through some stocks, I found that BOB came into a clear downtrend on the Hourly chart. However, even on a daily and weekly timeframe, it was in a Neutral zone or largely in negative territory. 

Hourly Chart: See the image below

Options Trading Idea

Daily Chart: See the image below

Options Trading Idea

My assumption is it is expected to remain in the choppy or continue traversing DBB Sell Zone on the hourly chart.

Trade Description

  • Sold 85 CE @0.8 INR
  • Bought 87.5 CE @0.5 CE INR
  • POP: 81.3
  • Maximum profit: 3510

See the graph below of the trade:

Options Trading Idea

Risk Management and Profit Target  

It’s the simplest trade that I could have taken. Though the maximum risk is much higher, we will not allow it to happen and cut the trade the moment the loss goes in the range of 5000-7000. Since it’s my personal risk appetite, you can decide your own rule.

The probability of trade going in profit is higher because the Bank PSU index is also in a bearish zone. I expect to earn theta or time value after this week and will book the profit when 75-80% of maximum profit is achieved. 

Trade Adjustment 

I will adjust the trade based on the outcome of the trade for a few days and see how the trade goes. 

Read Out This Blog: What is Time Value Theta

I hope you’ll be interested to know the outcome of this trade and I will stay updated about it.

Other possibilities

You can also take a Net Debit trade with the Put option. However, don’t hold it for more than 5-6 days as after that time value will start eroding. Here is the possible outcome.

See the image below:  

Options Trading Idea

Though the maximum risk is 45,000, promptly cut the losses if it starts going against your expectations. I’d prefer taking up to max 7000-10000 INR.

Keep practicing as I am doing it.

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Vikash Kumar

An investor with more than 15 years of experience in the market. I m deeply interested in positional and momentum-based trading strategies and love learning strategies and backtesting.

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