This product is suitable for traders who want to participate trending as well as sideways market scenario. In trending market phase the idea is to capture short term sharp movement in the underlying with limiting their maximum risk by buying call or put. And in sideways market the idea is to capture the premium available by selling call or put. This product is suitable for traders having high understanding of options as derivative product and risks associated with it.
This product is about swing trading in commodities using options where all the trades recommended would have a holding period of 10-15 days. All the recommendations given at any point of time shall be closed 3 days before the staggered delivery date.
Trades would be given in 2 commodities such as Gold and Crude oil. The trades could be either Long or Short in Call Options or Put Options based on analysis of the trend, expected move, time to expiry and implied volatility.
The Trades would be generated from in-depth Technical and Derivative analysis of the price, trend-structure, commodity cycle in terms of Long-Long un-winding or Short-Short Covering, momentum, open Interest, Volatility etc.
Risk:Reward is another major criteria which is taken into consideration and we strive to make traders comfortable and at ease by providing low risk high reward trade. The risk:reward for this product shall be 1:1.5 for first target and 1:2 for second target.
With respect to number of open trading positions, at any point of time we shall have a maximum of 3 open positions. And therefore the ideal Margin required to participate in this product shall be 5lakh since we also have selling of options which require margins. Traders can take trades in multiple lots based on the their capital size but for reference calculation purpose we shall show Profit and Loss based on one lot of trade.
- What is Velocity Options?
It is a Plain Vanilla option Strategy Where is a time horizon of 10-15 Days.
- What are the criteria for selecting commodities for options trading?
Liquid option strike in the commodities are selected for the option trading.
- Which are the technical parameters used to Select Commodity?
We look for the suitable risk-reward criteria, check classical technical analysis, Dow theory, PCR, Open interest data and other technical aspects.
- What are the maximum numbers of open trade?
The maximum numbers of open trade are 3.
- What are Risk-Reward criteria?
Risk –Reward for Option Recommendation is 1:1 for 1st Target and 1:2 for 2nd Target.
- What is Margin Requirement?
Margin requirement for the product is 5 lakh.
- Is it necessary to trade in all recommendations?
Yes to match with our P&L one has to trade in all recommendations.