Safest Option Trading Strategy With 20 Week Result

Safest Option Trading Strategy With 20 Week Result you can apply this strategy on any index.
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Welcome to an exhaustive exploration of the 20-Week Option Strategy, a sophisticated options trading system that blends weekly and monthly expiries to generate profits through premium collection and time decay. In this video, we unpack a strategy that achieved a total profit of Rs 69,332 across 15 weeks and experienced losses of Rs 6,526 over 5 weeks, yielding a net profit of Rs 62,806 over a 20-week period. Designed as a weekly trading approach, it leverages four strike prices, requires a margin of Rs 80,000 to 90,000, and follows a precise entry rule: trades are initiated on the next day of the weekly expiry. Whether you’re an experienced trader or looking to deepen your options knowledge, this video offers a step-by-step guide to understanding and implementing this strategy effectively.

The 20-Week Option Strategy is a 4-strike price options play that combines the rapid time decay of weekly options with the stability of monthly options. It’s executed each week, making it a weekly trading strategy, yet it incorporates monthly expiries to enhance flexibility and risk management. The goal? To create a delta-neutral position that profits from theta decay (time value erosion) while minimizing exposure to large directional price movements. Over 20 weeks, this approach has proven its potential, balancing 15 profitable weeks against 5 losing ones.

Here’s the breakdown of the four legs, assuming a current underlying price of 19700 (ATM):

Sell Weekly ATM Call (19700): You sell a call option at the at-the-money (ATM) strike of 19700, expiring at the end of the week.
Sell Weekly ATM Put (19700): You also sell a put option at the same 19700 strike for the weekly expiry.
Sell Monthly 100-Point ITM Call (19600): For the next monthly expiry, you sell a call option 100 points in-the-money, at 19600 (19700 - 100).
Sell Monthly 200-Point ITM Put (19900): Lastly, you sell a put option 200 points in-the-money, at 19900 (19700 + 200).

Timing is critical. The strategy requires you to enter all four positions on the next day of the weekly expiry. In many markets, weekly options expire on Thursdays, making Friday the entry day. This ensures you’re trading fresh weekly options with maximum time value and aligning the monthly options with the next full-month expiry. Each week, you repeat this process, adjusting strikes based on the new ATM price, and hold positions until the weekly expiry—though adjustments may be necessary (more on that later).

Performance Over 20 Weeks
Let’s dive into the numbers:

Total Profit: Rs 69,332, earned across 15 weeks of gains.
Total Losses: Rs 6,526, incurred over 5 weeks of setbacks.
Net Profit: Rs 62,806 (69,332 - 6,526).
Margin Requirement: Rs 80,000 to 90,000.
This translates to an average weekly profit of Rs 3,140 (Rs 62,806 ÷ 20), or roughly 3.5-3.9% per week on an average margin of Rs 85,000. Over 20 weeks, that’s a total return of approximately 74% on the margin—impressive, but not without risks. The 15:5 win-loss ratio suggests consistency, yet the losing weeks remind us that volatility can challenge even well-designed strategies.

To illustrate, let’s assume the underlying is an index like Nifty at 19700:

Stable Market (Price ~19700):
Weekly 19700 call and put expire worthless or near-zero, pocketing full premiums.
Monthly 19600 call and 19900 put lose extrinsic value weekly, though intrinsic value persists until expiry.
Outcome: Maximum profit from theta decay.
Upward Move (Price to 19900):
Weekly 19700 call loses value (ITM), while the put expires worthless.
Monthly 19600 call deepens ITM (more loss), but 19900 put’s loss caps at intrinsic value.
Outcome: Potential loss unless premiums offset the move.
Downward Move (Price to 19500):
Weekly 19700 put goes ITM, call expires worthless.
Monthly 19600 call’s loss caps, but 19900 put gains intrinsic value.
Outcome: Losses possible if movement exceeds premiums.

Margin Requirements
You’ll need Rs 80,000 to 90,000 in margin to cover the naked short options. This varies based on broker rules, volatility, and market conditions. With a net profit of Rs 62,806, the return on margin is substantial, but you must maintain this buffer to avoid margin calls during volatile weeks.

*Disclaimer : This video is only for educational purposes, based on research and my own experience, I'm Certified by NSE and SEBI (NISM) About Option Trading Strategies. Share market is very risky if you do anything after watching this video will have their own risk and responsibility; The Stockan Youtube Channel does not take responsibility for any damages arising directly or indirectly from any actions taken based on this video.
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