No More Losses ! Option and Future Hedging Strategy

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Welcome to an exciting deep dive into the world of No More Losses ! Option and Future Hedging strategy! In this comprehensive video, we explore two powerful trading strategies designed to help you profit in different market conditions:

one for volatile markets and another for range-bound markets.
Whether the market is soaring high, crashing low, or stuck in a sideways grind

these strategies—when combined—offer you the flexibility to potentially profit in any scenario. I’ve explained everything using one lot as the base unit, but if you want to scale up (e.g., 2 lots or 3 lots)

simply ensure all positions scale uniformly. For example, if you trade with 2 lots, every component (futures, puts, calls) will be 2 lots; if 3 lots, then all will be 3 lots. No guesswork—just consistency!

This video isn’t just theory. I’ve included live market examples from February, January, and December, showing you exactly how these strategies performed with real strike prices, entry times, profits, and losses. Plus, I’ll guide you on when to exit.

how to manage risk, and how combining these strategies can lead to double profits or offset losses. Ready to elevate your trading game? Let’s break it all down step-by-step!

What You’ll Learn About Option Strategy?

  • Volatile Market Strategy: A setup designed to capitalize on big market swings—up or down—using Bank Nifty futures and specific put options.

  • Range-Bound Market Strategy: A strategy tailored for stable markets, leveraging the sale and purchase of out-of-the-money (OTM) calls and puts.

  • Combining Both Strategies: How to apply both strategies together to maximize profit potential across all market conditions—volatile, range-bound, or trending.

  • Real-Life Examples: Detailed walk through of trades from February, January, and December, including strike prices, entry/exit points, and profit/loss outcomes.

  • Exit Rules & Risk Management: Clear guidelines on when to take profits or cut losses, ensuring you stay in control.

  • Live Proofs: See the strategies in action with actual market data and results.

Understanding the Strategies

Let’s dive into the two strategies I’ve outlined in this video. Both are based on Bank Nifty, one of India’s most popular indices for options trading, and use monthly contracts. I’ve kept the explanation beginner-friendly yet detailed enough for seasoned traders.

1. Volatile Market Option Strategy

This strategy is your go-to when you expect the market to make big moves—either upward or downward. Here’s how it works:

  • Position Setup:
    • Buy 1 lot of Bank Nifty Monthly Futures: This gives you exposure to the index’s price movement.Buy 1 lot of 1000 points In-the-Money (ITM) Put Option (PE): An ITM put has a strike price above the current at-the-money (ATM) level, offering intrinsic value and downside protection.

  • Why This Works:
    • If the market moves up sharply, the futures position profits, though the puts lose value. As long as the futures gain exceeds the premium paid for the puts, you’re in the green.
    • If the market moves down sharply, the ITM put gains value immediately (since it’s already in-the-money), and the OTM put kicks in as the market falls further, offsetting losses in the futures. The combined gains from the puts can outpace the futures’ losses.

  • Exit Rule:
    • Profit Target: Exit the entire volatile strategy (futures + both puts) if your profit exceeds Rs 5000.
    • Loss Limit: Exit if losses hit Rs 5000 to protect your capital.

  • Key Insight: This isn’t a standard straddle or strangle because it uses two puts (ITM and OTM) with futures instead of a call and a put. It’s a unique approach, leaning toward downside protection while still allowing upside gains via futures.

2. Range-Bound Market Option Strategy

This strategy shines when the market is stable or moving sideways within a predictable range. It’s similar to an iron condor, a popular options strategy for limited-risk, limited-reward setups.

  • Position Setup:
    • Sell 1 lot of 500 points OTM Call Option (CE): A call with a strike 500 points above the ATM price.
    • Sell 1 lot of 500 points OTM Put Option (PE): A put with a strike 500 points below the ATM price.
    • Buy 1 lot of 1000 points OTM Call Option (CE): A call with a strike 1000 points above the ATM price (further out than the sold call).
    • Buy 1 lot of 1000 points OTM Put Option (PE): A put with a strike 1000 points below the ATM price (further out than the sold put).

  • Why This Works:
    • By selling OTM options (500 points away), you collect premiums upfront. If the market stays between these strikes, the sold options expire worthless, and you keep the premium.By buying further OTM options (1000 points away), you cap your risk. If the market breaks out of the range, your losses are limited to the difference between the sold and bought strikes, minus the net premium received.
    • This strategy profits when the market doesn’t move much, making it ideal for range-bound conditions.

  • Exit Rule:
    • Hold until expiry (typically the last Thursday of the month for monthly Bank Nifty options) to maximize premium decay.
    • Alternatively, exit before expiry if the position shows a profit and you want to lock in gains early.

  • Key Insight: The risk is limited, and losses are often smaller than the profits from the volatile strategy, making it a great complement when combined.

Combining Both Strategies

Here’s the game-changer: applying both strategies together. Why? Because markets are unpredictable—sometimes they’re volatile, sometimes range-bound, and sometimes both within the same month! Combining them increases your chances of profiting in any condition:

  • How It Works:
    • Enter both strategies at the same time (e.g., 9:30 AM on your chosen day).
    • Manage them independently:
      • Exit the volatile strategy when it hits Rs 5000 profit or loss.
      • Hold the range-bound strategy until expiry or take profits early if it’s in the green.
    • If strike prices overlap (e.g., both strategies require buying the same put), increase the lot size for that strike accordingly (e.g., 2 lots instead of 1).

  • Benefits:
    • Volatile Market: The volatile strategy profits from big moves, while the range-bound strategy might lose, but its loss is typically less than the volatile strategy’s gain.Range-Bound Market: The range-bound strategy profits from stability, while the volatile strategy might lose, but its loss is capped at Rs 5000.

  • Double Profit Potential: In some months, both strategies can profit if the market moves significantly early (triggering volatile strategy exit) and then stabilizes (favoring range-bound strategy by expiry).

  • Important Note: You don’t exit both strategies at the same time. The volatile strategy has a quick exit based on profit/loss, while the range-bound strategy is a longer play, often held to expiry.

Live Market Examples: Proof of Concept

Let’s see these strategies in action with detailed examples from February, January, and December. I’ve used your exact data, correcting minor inconsistencies (e.g., strike price typos) while keeping the core intact.

February Example

  • Entry Time: 3 February, 9:30 AM
  • Bank Nifty ATM: 49200

Volatile Strategy:

  • Positions:
    • Buy 1 lot Bank Nifty Futures (ATM 49200)
    • Buy 1 lot 50200 PE (49200 + 1000 = 50200, ITM put)
    • Buy 1 lot 48200 PE (49200 – 1000 = 48200, OTM put)

  • Outcome:
    • On 7 February at 9:30 AM, profit = Rs 5622 (> Rs 5000).
    • Action: Exit the entire volatile strategy (futures + 50200 PE + 48200 PE).

  • Loss Scenario: If losses hit Rs 5000, exit immediately (though this didn’t happen here).

Range-Bound Strategy:

  • Positions:
    • Sell 1 lot 48700 PE (49200 – 500 = 48700, 500 points OTM put)
    • Sell 1 lot 49700 CE (49200 + 500 = 49700, 500 points OTM call)
    • Buy 1 lot 47200 PE (49200 – 2000 = 47200, listed as 2000 points OTM in your example, though the general strategy says 1000 points—likely an adjustment)
    • Buy 1 lot 50200 CE (49200 + 1000 = 50200, 1000 points OTM call)

  • Outcome:
    • On 27 February at 9:30 AM, profit = Rs 10329.
    • Action: Held until this point (close to expiry), exited with profit (expiry was likely 29 February, but profit taken early).

Combined Result:

  • Volatile strategy profit: Rs 5622 (exited 7 Feb).
  • Range-bound strategy profit: Rs 10329 (exited 27 Feb).
  • Total Profit: Rs 5622 + Rs 10329 = Rs 15951.
  • Analysis: A perfect example of double profit—the market moved early (favoring volatile strategy), then stabilized (favoring range-bound strategy).

Correction Note: Your initial example listed “Two lots 47200 PE” due to overlap, but the volatile strategy uses 48200 PE, not 47200 PE. No overlap occurred here, so it’s 1 lot 47200 PE for range-bound only.

Options Buying Strategy for Monthly

January Example

  • Entry Time: 30 December, 9:30 AM
  • Bank Nifty ATM: 51200

Volatile Strategy:

  • Positions:
    • Buy 1 lot Bank Nifty Futures (ATM 51200)
    • Buy 1 lot 52200 PE (51200 + 1000 = 52200, ITM put)
    • Buy 1 lot 50200 PE (51200 – 1000 = 50200, OTM put)
  • Outcome:
    • On 10 January at 9:30 AM, profit = Rs 6186 (> Rs 5000).
    • Action: Exit volatile strategy.
    • Bonus: Waited until 11 January, profit grew to Rs 26200.
  • Insight: Exiting at Rs 5000+ is the rule, but holding longer can amplify gains if you’re comfortable with the risk.

Range-Bound Strategy:

  • Positions:
    • Sell 1 lot 49700 PE (51200 – 1500 = 49700, 1500 points OTM put, deviating from 500 points—likely premium-based)
    • Sell 1 lot 51700 CE (51200 + 500 = 51700, 500 points OTM call)
    • Buy 1 lot 50200 PE (51200 – 1000 = 50200, 1000 points OTM put)
    • Buy 1 lot 52200 CE (51200 + 1000 = 52200, 1000 points OTM call)
  • Outcome:
    • On 30 January (expiry day) at 9:30 AM, loss = Rs 3399.
  • Note: You mentioned mid-month profits were possible—could’ve exited earlier to avoid the loss.

Combined Result:

  • Volatile strategy profit: Rs 6186 (10 Jan) or Rs 26200 (11 Jan).

  • Range-bound strategy loss: Rs 3399.

  • Total (if exited 10 Jan): Rs 6186 – Rs 3399 = Rs 2787 profit.

  • Total (if exited 11 Jan): Rs 26200 – Rs 3399 = Rs 22801 profit.

  • Analysis: Even with a range-bound loss, the volatile profit covered it, showcasing how combined strategies balance outcomes.

Correction Note: Your data had “50200 PE and 52200 PE” for volatile strategy, but 52200 PE aligns with 1000 points ITM (51200 + 1000), and 50200 PE is 1000 points OTM (51200 – 1000). Matches the strategy perfectly.

December Example

  • Entry Time: 2 December, 9:30 AM
  • Bank Nifty ATM: 51800

Volatile Strategy:

  • Positions:
    • Buy 1 lot Bank Nifty Futures (ATM 51800)
    • Buy 1 lot 52800 PE (51800 + 1000 = 52800, ITM put)
    • Buy 1 lot 50800 PE (51800 – 1000 = 50800, OTM put)

  • Outcome:
    • On 4 December at 9:30 AM, profit = Rs 5082 (> Rs 5000).
    • Action: Exit volatile strategy.
    • Next day (5 December), profit grew to Rs 12472.

  • Insight: Flexibility to wait can boost profits significantly.

Range-Bound Strategy:

  • Positions:
    • Sell 1 lot 51300 PE (51800 – 500 = 51300, 500 points OTM put)
    • Sell 1 lot 52300 CE (51800 + 500 = 52300, 500 points OTM call)
    • Buy 1 lot 50800 PE (51800 – 1000 = 50800, 1000 points OTM put)
    • Buy 1 lot 52800 CE (51800 + 1000 = 52800, 1000 points OTM call)

  • Outcome:
    • On 24 December at 3:30 PM (near expiry), profit = Rs 8752.
  • Overlap Note: Both strategies buy 50800 PE (1 lot each), so total = 2 lots 50800 PE.

Combined Result:

  • Volatile strategy profit: Rs 5082 (4 Dec) or Rs 12472 (5 Dec).
  • Range-bound strategy profit: Rs 8752 (24 Dec).
  • Total (if exited 4 Dec): Rs 5082 + Rs 8752 = Rs 13834.
  • Total (if exited 5 Dec): Rs 12472 + Rs 8752 = Rs 21224.
  • Analysis: Another double-profit scenario, with overlap at 50800 PE handled seamlessly.

Additional Notes & Clarifications

  • Scaling Lots: I’ve explained everything with 1 lot. Want to trade bigger? If you use 2 lots, then futures, ITM PE, OTM PE, sold CE/PE, and bought CE/PE all become 2 lots. Same for 3 lots or more—keep it uniform!

  • Strike Variations: The general strategy says 500 points OTM sell and 1000 points OTM buy for range-bound, but examples show adjustments (e.g., 47200 PE is 2000 points OTM in February). This could be due to premium levels or market conditions—adapt as needed.

  • Overlapping Strikes: When both strategies buy the same strike (e.g., 50800 PE in December), you’ll have 2 lots for that position. Check your strikes each month!

  • NSE Expiry Changes: The National Stock Exchange may shift expiry days (e.g., from Thursdays to Mondays), but this won’t impact these strategies since they’re monthly and flexible.

  • Risk Warning: Options trading carries high risk. Only trade with money you can afford to lose, and understand the strategies fully before diving in.