The goal of Amadeus trading is to earn theta gain by writing out of the money options.The net invested captial is to be INR 250,000 completely funded by me. The execution will be carried out by an entity henceforth called trader. The trade ideas will be created by me, henceforth called Analyst.
There will be two ideas alive at any moment. Each will have a maximum margin requirement of 65,000. 120,000 will be used to cover when the trades go bad. Losses will be covered aggressively by buying in the money options. The target return for 130,000 invested will be 40%. So each trade should earn 1,200 in a period of 15 days.
The job of analyst is to come up with support or resistance levels with enough margin so that the option can be written for one month. The analyst will have complete control over the trade to be executed when the market is closed. Every ten days two new ideas will created. The following points will encompass an idea:
- Stock name
- Stock price
- Support level
- Resistance level
- Proposed trade
- Implied volatility
- Historical volatility percentile rank
- Option distance from stock price in terms of standard deviation
- Comments
The job of the trader is to execute the trades on the same day at the most favorable price. The trader will have complete control over the decision of exiting the trade whenever the market is open. The trader can open new trades as long as they consist of buying options in the direction opposite to written option. The trader can use the 120,000 to execute day trades on options of his choice. But the focus should never be lost on the main goal of writing options for theta gain.
It is yet to be decide when the losses should be covered. This will need to be taken into account during execution.
