Strategy description

Instruments Traded:  Monthly Option Contracts of Nifty & BankNifty Index and the top 6 most liquid stocks on NSE

Trading style: Mid Term Trend, Directional theta decay  

Minimum Capital Required – 10 Lakhs 

Stop Loss Criteria:  Each individual position in the strategy has predefined risk metrics/stop-loss beyond which a position is squared off. 

Strategy Background:  This trading strategy aims to take advantage of a specific return drivers and systemic market inefficiencies to generate alpha. It tries to identify mid-term trends in the underlying indices and also leverage option theta decay. Some of the short option positions taken by this strategy is inherently hedged while most have directional bias. This is a positional strategy and might carry over  positions for days and weeks. 

Risk: This strategy can go through significant drawdown periods (loss of -25% to -30% of invested amounts) and might continue to be underwater for as long as 6 months under certain circumstances. 

User's responsibility: User is advised to use a 0 brokerage broker for implementing this strategy, as brokerage costs can eat into your profits significantly. While choosing a broker user should research properly to make sure broker API is reliable with least execution issues. 

Disclaimer:  I am not a SEBI registered investment advisor. Please note that neither any suggestion or solicitation is being made about investing in this strategy. This strategy trades derivative instruments and is inherently risky. If you subscribe and/or invest in this strategy you are doing so entirely at your own responsibility and risk. Kindly read through risk associated with derivative strategies below.

Risk Disclosures on Derivatives:

1. 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
2. On an average, loss makers registered net trading loss close to ₹ 50,000.
3. Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
4. Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

       Source: SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O)         Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-

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The Team: If you want to know more about the team behind this strategy you can visit https://severussystems.com/