24700 CE

2 more hits on the CE. No rise in PEs so all credit to theta decay. Overall, another superb week. 3 more trading days to go for completing a full month of executing this system. Will post the full statistics on 30-Jul.

24850 CE - another failed attempt at reversal

24900 CE - first attempt at reversal; exit with minor loss

25000 PE - classic hidden divergence in the direction of the strong trend

Blockbuster - 25300 PE

31-Jul expiry - 2 trades for the day

Learning of the week: In extreme low IV environments, switch to next week expiry as soon as you notice that you are getting battered by theta more than the price action. Saves a lot of pain.

The choppiest day for the system even though the underlying price action doesn't tell as much. 6 trades in total. Most of the time, both CE and PE trades were running together. Interestingly, only a small negative day. PEs took care of the CEs.

Some observations after the suggestion received from @Ravi Shinde to follow the spot chart for divergences and taking trade on options.

• At times, underlying generates a signal but no signal on options chart. In a way that saves from a probable false move but on the other hand creates psyche issues such as FOMO and disbelief in the system for those few minutes.

• It happens that after a trade is initiated, underlying does not give an exit but options do. Especially, during low IV environments. Psyche issues again.

• At times, reading divergence on the underlying becomes difficult/confusing. The small box size on the underlying creates a lot of troughs and peaks on the indicator and it keeps you guessing.

• Overall, the level of difficulty increases when taking signal from one instrument and trading another. I find it much easier to look at one chart and take whatever signals it gives. Also easier to take care of any chinks in the armor during post-market analysis such as backtesting, exercises to improve R:R, evaluating patterns etc.

It was a good exercise. Thanks, Ravi.

@Akash, none of the above. All I need to do is keep the option charts open for anything that has premium between 125 and 160.

24950 CE. Excellent day.

25150 PE

Good start to the week.

25000 CE - 1 hit and 1 BE. Difficult times for long options - very low IVs, grinding moves. But system has to be followed cause tides can change without advance notice.

25250 PE

25350 PE - 2 trades to end the day.

24950 CE - SL hit

25050 CE - first attempt failed. Second attempt did great.

25300 PE - another one for the records but not tradeable. Morning gap leaves you helpless. SL is off-limits and all you can do is leave it and wait for the next trade.

@Ravi Shinde, in my observations from the past, I have consistently seen that options exhibit signals earlier than spot/fut. However, I hadn't looked at the underlying charts on a very small brick size. This is surely interesting, and I'll observe this for the next few days. Maybe I'll change it to 0.02% H-L to avoid re-painting on close. Intraday will need fast action. But again, thanks for your comment. This is why I've started posting on this forum - hoping to get suggestions/feedback and improve further.

Everyone knows the saying 'simple strategies work'. Definedge's SAR strategy using MAST indicator on Nifty/BN futures has been well-known and is one of the simplest ones I have ever seen. To trade it with utmost discipline is a different thing altogether

Concept:
It is widely agreed that BRN (big round numbers) work as major levels of support/resistance. I have always been amazed at how straddles of BRN strikes far from the ATM give hints about what's really happening under the radar. Long back I had posted a chart and a conversation with AP sir provided motivation to dig deeper into this area. However, only a few months ago did I start developing a simple strategy with the idea that markets move in ranges and BRN strikes can act as good pillars to hang our hammock and lie in it peacefully while eating premium.

So here are the rules and performance of this strategy since January 2025. I traded this live from Feb. to May but gave up thereafter due to a reason I'll explain in the end. I am still keeping track of each trade and intend to do so in the near future.

Instrument & Charting Method: Nifty monthly options; Renko 1% box size, 1-min

Capital & Position Sizing: 3,25,000 per straddle. Minimum 2 straddles (1 each above and below ATM)

Indicator: D-Smart

Rules:

• Sell next month straddles - 45 DTE.
  e.g. if Aug 28th is the expiry, start trading that from July 14th. Trade this expiry until Aug. 11th and then switch over to Sep. expiry which will be 45 DTE.
• Entry - choose two BRN (big round number) strikes, one each above and below the spot price. For e.g., today Nifty spot is 25200, so choose 25000 and 25500. Sell those straddles if the price is below D-Smart.
• SL/Exit - D-Smart line is the stop. Switch to the next nearest BRN straddle as per entry rules.

Dealing with various scenarios when spot is at or near a BRN, for e.g. 25000:

1. In such a scenario, there will be confusion regarding strike selection between 24500/25000/25500. Normally, it will be easy to choose as only 2 out of the 3 strikes will be below D-Smart.
2. In few scenarios (when VIX is low and market is extremely sideways), all 3 strikes will be below D-Smart. Sell the two strikes which are lowest in premium among the three.
3. A rare scenario is when only 1 BRN strike among the 2/3 is below D-Smart. In this case, just sell that one and wait to sell whichever strike goes below D-Smart first.

Statistics:

Note: there is no P&L for January as the trades started from Jan 13th ran all the way until Feb end.

Currently active trades: August 25000 and 25500 straddles

End Note:
So the reason that I stopped trading this system was what happened in May. Selling naked straddles overnight is not for the faint hearted. I always hedged them and that took away some profits which I was giving up unhappily. However, the Indo-Pak war days gave me uncomfortable days in spite of the hedges. The psychology got to me and I started breaking rules. Eventually I realised that this system was not for me and gave up. As it happens with all, I was left with my mouth gaping when June resulted in a huge positive month Anyway, this is a good system on its own with hardly any work to do and decent returns. It's up to the trader to manage the risk and psychology. Would love to hear feedback/thoughts.

25000 CE - almost 100 pts! Missed this trade due to a couple of reasons:

1. This system depends on divergence as displayed by BI. Now the issue is that divergence is based on the price action of the instrument and each strike has its own action going on. Not every strike will exhibit divergence. I was looking at 25050 CE and it gave no signal.
2. Even if I was looking at 25000 CE, the initial SL was beyond my limit so wouldn't have taken the trade. In hindsight, I could have gone with half qty.

All good learnings and food for thought. Helps improve the system. The thought process behind this system is working very well and that is consolation enough.

Finally the end of shorts. An excellent trade that lasted for 7 days.

25250 PE - good effort but couldn't sustain.

Last trade of the day, 25000 CE

2 more trades. 25150 PE triggered first. Later 25050 CE triggered while PE was still on. Both done now.

@Ashish Talekar , DC is 28 and BI is 10.
I select a strike having premium in the range of 130-150.

25050 CE

Booked 25200 CE and moved to 25000 CE.

@Harpreet Singh, by bearish trades I assume you are referring to short options? If so, I am not very comfortable working with negative divergences. Probably just a frame of mind developed over the years. Also, I wanted to develop an intraday long options system that would complement my other short options swing trading system.

Intraday brick zone% is a slightly different indicator in that it only focuses on the day's action irrespective of what has happened in the previous session(s). It does not provide any insight on divergences.

Good run... going strong.

3 consecutive hits. The system aims to pick up reversals and it is tough when the trend is strong. This is a good time to test and gather insights for future improvements. Overall a good week. Looking forward to the next week.

SL hit for NIFTY 17-Jul-2025 CE 25200.

@SANTANU BEZ, Pinches a little to miss this. Made high of 240 and still not over. But there will be many more such trades in the future

Missed this entry in 25350 PE while the SL hit in the earlier trade. Perfect hidden divergence which generally occurs in the direction of the main trend. Price will not always be at/near DC LB when the trend is strong and one has to keep an eye for hidden divergences. This makes me re-think the necessity of having DC as part of the setup. Regular divergence can be spotted without DC too. Will continue to track this.

SL hit for NIFTY 17-Jul-2025 CE 25300.

Forgot to mention an important trailing/booking rule in the original post. Once the position is in profit by 100+ pts., it should be booked to move to the near ATM strike having premium between 260 to 280. Booked the current position at 125 and switched to NIFTY 24-Jul-2025 CE 25200 having premium 266 and also switched to 24-Jul expiry as per rules.

SL hit for NIFTY 17-Jul-2025 CE 25450. The only trade of the day.

An important point missed under 'observations' in the initial post - avoid trading current expiry on the expiry day as those options become volatile and chances of hitting SL increases greatly, especially when trading HL. Switch to next week expiry on the current expiry day. No trades so far today. Let's see, a couple of hours to go.

NIFTY 17-Jul-2025 CE 25300 shorted yesterday at 276.

Intro:
I have always been fascinated with Guppy MMA (https://www.definedgesecurities.com/library/guppy-multiple-moving-average/), probably because of its visual representation on the chart but more so because it gives me strong conviction about the direction of the trend. An equally favorite indicator for me has been the Donchian Channel. So I combined both of them with an aim to create a swing trading system that would benefit from the change in delta (directional moves) as well as some theta decay while keeping the Gamma impact (avoiding volatility near expiry) to a minimum.

I've been trading this system for a little over 8 months now and it has worked well. Based on the experience so far, I recently made a couple of changes to the rules defined in the beginning and rectified a formula that I was using to calculate drawdown. This has resulted in a significant reduction in the DD while keeping the returns intact. Below are the system rules as I trade today, and the statistics.

Instrument & Charting Method: Nifty weekly options; Renko 3% box size, 1-min

Capital & Position Sizing: 4 lacs per lot. Minimum 2 lots (as quantity should be reduced to half when daily P&F X% breadth for Nifty 50 is not in favor).

Indicators:

• Guppy MMA (EMA)
• Donchian Channel (28)
• Nifty P&F X% breadth (DECMA 5-in-1 method)

Rules:

• Sell weekly options - minimum 7 DTE and maximum 14 DTE.
  e.g. if Jan 14th is the expiry, start trading that expiry from Jan 1st and stop on Jan 8th - switch to next weekly expiry.
• Choose a strike having premium in the range of 270 to 320.

Entry (all conditions necessary):

• Bearish brick is below Donchian Channel LB (28)
• All fast MAs of Guppy MMA group are below the slow MAs.
• Take only long trades (short PE) when the daily P&F X% breadth (box size 1%) is above MA, and vice versa.
• If a short entry signal (short CE) is generated when the daily P&F X% breadth (box size 1%) is above the MA, trade half the quantity. Vice versa for long.

Exit:

• Brick low at 1 is above any of the slow Guppy MMA & brick at 0 is bullish.
• In other words, at least 2 bullish bricks should fully overlap the group of slow MAs of the Guppy MMA indicator.

Statistics:

Confession:
I will admit that I haven't been able to execute this system 100% accurately due to various reasons - trading breaks, psychology issues in the beginning (resolved now), lack of objectivity in the rules in some scenarios (addressed now) etc. However, I believe all these were necessary for me to remove the imperfections, both in the system and myself. Today, I trade this system without any issues as if it is a part of my daily routine like everything else.

Example of Entry and Exit:

2 trades for the day.

Divergences are of 2 types - regular and hidden. Mostly you will find regular divergences, i.e. price has made a LL whereas BI has made a HL. A few times hidden will happen (like today morning, 25400 CE) wherein price has made a HL and BI has made a LL. I will take both.

Concept:
I believe that a good and reliable way to consistently make money (intraday) by going long is entering in undervalued zones and exiting when the price is overvalued/overbought. This can be true irrespective of strategy/setup/indicator. Fundamental analysis has methods to determine if the instrument is undervalued and a good buy. What are the methods to determine value using technical analysis? There are many ways as listed here: ([https://tinyurl.com/u6vyhp3a](link url)). Among them, I find 'support levels' and 'oversold indicators combined with divergence' to be of great help. In this strategy, I have used Donchian Channel to identify support and Brick Indicator to find oversold areas. Add to this the key ingredient of divergence.

Setup:
Entry: Look for a positive divergence on the Brick Indicator when it goes to -4 or below. Scan left (4-5 sessions) to ensure the price is near a support zone. Enter on a bounce of 2 bricks from the DC LB.
SL: 3 brick-back (i.e. 1 brick below DC LB).
Trail/Exit: I book half at 1:1. For the rest, I move SL to entry and trail until a negative divergence appears between price and Brick Indicator OR exit at 3:20 pm if none of that happens.

Observations:

1. A divergence happening when the Brick Indicator value is at least -4 or less (-6, -8, -10) is good. Any higher values (-2, 0 etc.) generally result in false signals.
2. The DC part is totally objective. Scanning divergence on BI is clear and objective in most instances. Rarely, it can appear subjective but regular practice makes it easier to interpret.
3. Using High-Low charts is recommended for Intraday as prices move fast and entry/SL orders can be entered in advance.

Conclusion:
This setup should work very well across instruments and timeframes. I would love to hear feedback/observations from anyone reading this thread and applying it to their trading instrument(s). I will keep posting my charts here regularly.