In AIT model I think it should be Sell ATM Put and Buy OTM Put when LONG and Sell ATM Call and Buy OTM Call when SHORT
Weekendinvesting Momentum Advisory
Apr 2, 2022
Yes - there was a typo there. When LONG - we will SELL ATM Puts & BUY OTM Puts & when SHORT - we will SELL ATM Calls & BUY OTM calls.
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Saurabh
Mar 30, 2022
Thank you so much. I like the fact that you are open and flexible and trying to give in your best to help your users. Looking forward to the material and continuing to learn.
Weekendinvesting Momentum Advisory
Mar 30, 2022
Thanks Saurabh - We have tried to give our best to try and provide the best experience for all users. We wish you the best & hope you got the links to other material.
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Saurabh
Mar 30, 2022
Hi - In terms of risk management - how should one read the risk spread factor in the sell-spread model? Is that the maximum amount one could lose in a trade? A 10% default for that seems high. So, I am sure I am missing a point here. Could you please clarify.
Weekendinvesting Momentum Advisory
Mar 30, 2022
No - RSF is used only to arrive at the quantity. It is Capital x RSF / Spread Gap. So if Cap is 4 lac , RSF is 10% & Spread gap between ATM & OTM strike is 100, Qty is 4 lac x 10% / 100 = 400 (8 lots). The max loss and max gain per trade depends on the premiums. Lets say your sell prem is 75 and buy premium is 25. The net credit will be 75-25 = 50. When you multiply that with qty (400), then the max profit you can make is 400 x 50 = 20,000 which is 5%. Max loss is spread gap (100) - net credit = 100 - 50 = 50 which is also 5% of capital.
So - if credit is 25, max loss will be 75 points.
This is also given in col U & V. You can also ref to the pay off dashboard
So - if credit is 25, max loss will be 75 points.
This is also given in col U & V. You can also ref to the pay off dashboard