When I shared an Option Adjustment video (check out here: https://youtu.be/Dm-BOZfHq7Y), some of the viewers commented that the adjustment is capital intensive and one needs to block lots of margin (buying power) to carry out this adjustment.
Although, I humbly disagree that the strategy in question is very capital intensive yet am aware of the fact that there can be cases where one might be strapped for capital and may not be able to deploy that adjustment to defend sold option position.
This video is part of my endeavour to offer you a low margin strategy that also works as an adjustment.
The strategy is called Back Ratio Spread and is one of the best strategies to bet on wild directional moves.
Table of Contents:
00:00 - Introduction
00:17 - Agenda
01:06 - The Other 2 Adjustment Strategies
01:25 - What is Back Ratio Spread
02:20 - Trade Entry with Debit or Credit
03:06 - Example with Pay-off Diagram (Nifty)
04:29 - Back Ratio v.s. Buying Naked Option
08:33 - Key Feature 1 - Low Margin Strategy
09:24 - Key Feature 2 - Time & Volatility Impact
10:59 - Selecting Underlying & Right Entry Conditions
12:55 - Back Ratio Spread on Both Sides?
15:05 - Back Ratio Spread - Real Example
19:42 - Defending Back Ratio Spread - Example
26:00 - My Silly Mistake in Defending the Spread
29:53 - Using Back Ratio Spread as Adjustment!
You might also like:
The Two Technical Indicators Every Option Writer Must Know:
https://youtu.be/0UdGGK1Gqmk
My Intraday Option Selling Strategies:
https://youtu.be/1oe1EwnZXJE
How to Defend a Vertical Spread:
https://youtu.be/7-mKM1yIc5w
A Risk-Free Way To Generate Weekly Income from Bank Nifty Options: https://youtu.be/6trrmcisGIs
Edge for Bank Nifty Traders:
https://youtu.be/7o71fMRWyhM
I would love for you to leave your comments underneath and I can assure you that you will be heard & responded to!
About me:
I am a full time trader with over 10 years of experience. Originally from India, I have been living in Australia since 2015. I trade markets across the globe. 70-80% of my trading income comes from Option Trading.
In this channel, I strive to serve my visitors with the best of what I know about trading in markets across the globe. If you have any suggestion/feedback or just feel the need to say, 'hi'; then feel free to send me an email or just leave a comment underneath any of my videos. You shall be heard and responded to!
Blue Skies,
Sanjeev Kaushik
Twitter: https://twitter.com/methodictrades
Email: sanjeev.kaushik@methodicaltrades.com
Website: www.methodicaltrades.com
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