MASTERING

EXPIRY DAY TRADING

(FOR BOTH DIRECTIONAL & NON DIRECTIONAL BASED OPTION
SELLERS)
CONTENTS
INTRODUCTION & BASICS
• WHAT IS EXPIRY DAY TRADING & WHY IT’S POPULAR AMONG TRADERS
• WHY OPTION SELLING HAVE AN EDGE OVER OPTION BUYING
• OPTION SELLING FOR SMALL CAPITAL TRADERS
• DIRECTIONAL vs NON DIRECTIONAL BASED OPTION SELLING
• ADJUSTMENT IN OPTION SELLING
• ROLE OF INDIA VIX IN OPTION SELLING
• EFFECTS OF OPTION GREEKS ON EXPIRY DAY
 CONTENTS
DIRECTIONAL BASED OPTION SELLING STRATEGIES
• OPTION SELLING AT THE OPENING BELL
• OPTION SELLING BASED ON INITIAL BALANCE RANGE
• OPTION SELLING BASED ON CPR
• OPTION SELLING BASED ON RANGE BREAKOUTS
• OPTION SELLING BASED ON 20 EMA
• OPTION SELLING AT BUYING OR SELLING CLIMAX
CONTENTS
NON - DIRECTIONAL BASED OPTION SELLING STRATEGIES
• DEPLOYING SHORT STRADDLE & ADJUSTMENT
• DEPLOYING SHORT STRANGLE & ADJUSTMENT
• DEPLOYING DOUBLE RATIO SPREAD
• DEPLOYING CALL RATIO SPREAD & ADJUSTMENT
CONTENTS

POSITION SIZING & RISK MANAGEMENT IN OPTION SELLING

• POSITION SIZING ON EXPIRY DAY TRADING
• RISK MANAGEMENT & KEEPING STOP LOSS ON EXPIRY DAY
• CHOSING RIGHT STRIKE PRICE ON EXPIRY DAY
• RISK INVLOVED IN EXPIRY DAY OPTION SELLING

LIVE EXPIRY DAY TRADING VIDEO WITH TRADE EXPLANATION

INTRODUCTION & BASICS
 WHAT IS EXPIRY DAY TRADING & WHY IT’S POPULAR AMONG
TRADERS

What is Expiry Day Trading?

• Expiry day, as name indicates, it is the day on which specific option
contract expires, for e.g. just like any packaged products or any
pharmaceutical items have expiry date.
• All OTM Options gets expired worthless on expiry day, irrespective of
how much premium it has at the beginning of the expiry.
• Every option contract expires on specific day of the week/ month.
EXPIRY DAY SCHEDULE
Expiry Day Instrument Timing

Monday* Nifty Mid cap 9.15-3.30

(*From 21st August 2023)
Tuesday Fin Nifty 9.15-3.30

Wednesday* Bank Nifty 9.15-3.30

(*From 6th Sept 2023, excluding monthly expiry)

Thursday Nifty 9.15-3.30

Friday Sensex/Bankex 9.15-3.30

*If a public holiday falls on expiry day, then the expiry day will be the previous trading day .
Why expiry Trading popular among Traders community?
• On expiry day, theta decay is faster, and all out-of-the-money options
expire worthless, giving options sellers high winning probability.
• As per statistics 70% of the time market stays sideways and only 30%
of the time market goes in trend, and option seller can make money
even when market is sideways.
• On expiry day Option seller need to just know where market is not
going rather than where market is going, option seller need to just know
the level where market will not reach and sell those option strikes.
• There is inherent edge in option selling one expiry day due to theta
decay, because with passage of time theta decays( e.g. like ice cubes)
 WHY OPTION SELLING HAS AN EDGE OVER OPTION BUYING
• Option trades can be either an option buyers and enjoy unlimited profit potential
but limited winning probability or be an option sellers with a limited profit but
higher probability of win rate.
E.g. like Casino player & Casino owner
E.g. like Insurance seller & Insurance buyer
• One small price movement against the direction can hit Stop loss of a option buyer where
Option seller will get some flexibility, since Theta(time decay) is on option sellers side.
• Two ways to make money in option selling rather than only one way to make money in
option buying (as 70% of the time market remain sideways and option seller can makes
money on sideways days also)
 OPTION SELLING METHOD FOR SMALL CAPITAL
TRADERS
Margin Requirement for Options Selling
• To sell one lot(15 units) of Bank Nifty naked calls/puts require around 79k (approx.)
• To sell one lot(50 units) of Nifty naked calls/puts require Rs 1.01 Lakhs (approx.)
• To sell one lot(40 units) of Fin Nifty naked calls/puts require Rs 1.05 Lakhs(approx.)
(as on 3rd August 2023)

To reduce the margin one can hedge the sell position and get margin benefits
Hedging to reduce margin for Small capital traders
1. If you are Bearish, to reduce the margin one can hedge the CE Sell position with far
OTM CE buy position for margin benefit.
(E.g. If your are bearish in Bank Nifty then selling BANK NIFTY 40000 CE and buying BANK NIFTY 40,500
CE or some far OTM options which are very cheap)

2. If you are Bullish, to reduce the margin one can hedge the PE Sell position with far
OTM PE buy position
(E.g. If your are bullish in Bank Nifty then selling BANK NIFTY 40000 PE and buying BANK NIFTY 39,500
PE or some far OTM options which are very cheap)

By hedging the sell position you can bring down margin to around 24k(approx.) per lot
from initial margin of 79k (approx.) by naked selling at in Bank Nifty.
DIRECTIONAL vs NON DIRECTIONAL BASED OPTION SELLING
• Directional trading involves taking trades based on the price movements of
an instrument based on technical analysis, price action etc.
Here mostly trader keeps SL(stop loss) to protect from big loss in case the direction
totally goes wrong.
(e.g. like selling CE in bearish market and selling PE in Bullish market)
• In non-directional trading it’s a different approach, they focus on
generating profits from time decay in the options market with a neutral or
sideways bias most of the time.
Here mostly option seller does adjustment if the trade is going against them.
Pros and cons of Directional based Option selling
Pros:
• Higher profit potential compared to non directional trading.
• Risk Reward is too good compared to non directional trading.
• Most ideal for price action Traders who know how to read charts.
• Peaceful trading compared to non directional based Trading.
Cons :
SL(stop loss) are common if the direction totally goes wrong, so re entering in the
trade will be challenging once stop loss hits.
Pros and cons of Non - Directional based Option selling
Pros:
• Win rate is good since 70% of the time market stays sideways.
• Many times losing trades can be converted to breakeven or with a small profit
if one is good with the adjustment.
Cons :
• Lower profit potential compared to directional based trading.
• Risk Reward is lower compared to directional based trading.
• If trade is not going right then it can lead to big loss and also trade can go
messy with too many adjustments, and one need to be constantly Infront of the
screen to monitor the position.
 ADJUSTMENT IN OPTION SELLING
In simple terms, adjustments means putting an additional trade or modifying the
strikes in the existing strategy with the purpose of either reducing the loss or
trying to convert losing position to breakeven or back to profit.

Adjustments should not be seen as some kind of holy grail. There are trades that
work and trades that don’t. So, it’s best to accept the loss in some cases (once max
loss of 1% of capital is hit) instead of keep doing adjustments one after another.
3 important points to know before learning how to do adjustment
Why to Adjust?
When to Adjust?
How to Adjust?
Why Adjust ?
• Increase the probability and the range .
• Adjusting can give lesser returns but lesser drawdowns, as compared to directional
based trading with stop loss.

When to Adjust?
• Major support or resistance is broken .
• Mismatch in premium (delta mismatch)
How to Adjust?
• Shifting the strike (like cutting one leg or adding another leg)
• Two types of shifting: Defensive shifting and aggressive shifting.
Summary of Adjustment in Option selling
1) Mark important support/Resistance on chart
• If resistance breaks push Calls away/If Support broken push Put options away
2) If market continues to go up as per your Bullish direction
• Push Call options further away(defensive) or bring Put options closer(aggressive)
• or close the call option and keep only put option open & renter only if market reverses.
3) If market makes total reversal from top after the initial bullish move
• Bring call option back closer or push the put options away
 ROLE OF INDIA VIX IN OPTION SELLING

• India VIX, also referred as volatility index or risk index or fear index.
• If the current index is trading at 18,000 and India VIX is trading at 20.
Then, expected volatility over the next year will be:
Index spot: 18,000
India Vix: 20
The expected downside for the year = 18000 – 20% of 18000 = 14400
The expected upside for the year = 18000+ 20% of 18000 = 21600
Here, the expected range for the year is between (14400 and 21600) for that
index.
• Generally when market is going up India VIX comes down and when
market is crashing India VIX start going up.
• For e.g. India VIX was less than 20 before Covid pandemic, But after the
covid disease broke out, VIX has crossed the 20 level and went to as
high as 86 for a few days. and we have seen the Indian equity Index
crashed nearly 40 percent of its value and was trading near 8000 levels
during that time.
• But be aware of the fact, India VIX does not give any indication of the
directional move in the market, it simply indicates the volatility in the
market
• India VIX also plays a very major role in the pricing of Options.
• A higher India VIX levels usually signal more volatile prices for options and a
stable range would mean that the options are priced reasonably.
• In low VIX environment premium will be very less for Option sellers to sell
options.
• If India VIX is high than good for option sellers because they get very good
premium to sell, but on downside if VIX start increasing they can incur losses
due to spike in volatility.
• India VIX trading anywhere between 12 to 25 known as normal, anywhere
below 12 known as too low and above 25 known as too high.
 EFFECTS OF OPTION GREEKS ON EXPIRY DAY

Option pricing model

The pricing of options is complex and non-linear, as compared to futures, which is
a linear price-based derivative on the underlying like Nifty/Bank Nifty/Fin Nifty.
The option prices as per the Black Scholes model are dependent on
• Underlying price
• Strike price
• Time to expiry
• Volatility of the underlying asset
The different components(Called Option Greeks) that influence the
option premium are
Delta ---------------------------> sensitivity to underlying price
Gamma ------------------------> accelerator for Delta
Theta ---------------------------> sensitivity to Time to Expiry
Vega ---------------------------> sensitivity to Volatility
• Delta -------> As a Non directional based Option seller they need delta to be
neutral, not to move much, especially non directional option sellers.
• Gamma -------> Gamma and Delta are interlinked, just like if your Car is Delta
then accelerator is Gamma, gamma increases exponentially near to expiry if
there is a big move in underlying, gamma is enemy for Option sellers.
• Vega ----------> Volatility is both friend & enemy for Option sellers, if volatility
comes down then premium price also comes down which is good for Option
sellers, but if Volatility goes up it is bad for Option sellers because premium
prices spikes even if there is no movement in underlying.
• Theta ----------> Theta is the biggest friend for all Option sellers, time always
decays with time, no matter what, so Theta is biggest weapon for Option sellers.
DELTA EFFECT
GAMMA EFFECT
THETA EFFECT
THETA EFFECT
VEGA EFFECT
DIRECTIONAL BASED OPTION SELLING
STRATEGIES
 STRATEGY 1 – OPTION SELLING AT THE OPENING BELL
Criteria
• Look for important support/resistance on your chart based on previous session like
PDH, PDL, Supply Zone, Demand Zone & Turning point, even in big gap up/down.
• Plot 5 min chart and wait for 10 -15 seconds and Sell option at the opening(ATM or
Slightly OTM) if candle start making bearish at resistance or Bullish at support, enter in
the first candle in first minute itself.
• Keep SL at 100% of the premium you received and trade only half size only ( e.g. If
your regular position size is 10 lots then only trade with 5 lots) Start adding only if first
candle high or low breaks or trade going in your direction.
• This is a high risk high reward strategy, since premiums are too good at the opening,
one can get very good risk reward trade if the trade works.
 STRATEGY 2- OPTION SELLING BASED ON INITIAL BALANCE
RANGE
Criteria
• This strategy applicable only after one hour, based on Initial balance (1st one hour of
the day) specially when days opens and makes parabolic moves with price staying
too away from 20 EMA.
• Look for one hour range, if it is too wide with a series of green or red candles then
after one hour wait for at least 3 opposite candles(or one big maribozu candle)
which are reversing, opposite to initial trend. Enter short after third reversal candle or
big maribozu candle.
• SL below days high or low based on options chart, ATM option better, make position
size according to SL in the options chart.
• This is a high win rate strategy which can work most of the time, but doesn’t happen
very frequently.
 STRATEGY 3- OPTION SELLING BASED ON CPR
Criteria
• This strategy based purely on CPR, whenever CPR is average or wide then this strategy is
applicable and applicable only in first 30 minutes.
• Look for days with Average/wide CPR, If Bank Nifty have narrow CPR but Nifty have
average or wide CPR still trade can be taken in Bank Nifty, because Nifty, Bank Nifty, Fin
Nifty moves in tandem most of the time, same applies for Fin Nifty also.
• Look where price opens, above the CPR or below the CPR, Enter long or short trade the
moment candle opens and makes bullish or bearish at CPR or take entry moment it touches
central pivot after opening above CPR or below CPR.
• Keep SL at 100% of premium but with half position and then add to only if trade is going in
your direction. ATM option better, SL on either side of CPR or 100% of premium of half
position, make position size according to SL in the options chart.
• This is a high win rate but more like scalping entry where one has to be quick in entry.
 STRATEGY 4- OPTION SELLING BASED ON RANGE BREAKOUT
Criteria
• This strategy based purely on price action narrow range, this strategy is applicable
only after 30-45 min of the day, (higher the narrow is range better it is) and
applicable in mid afternoon also if again it makes a long narrow range.
• Look for days opens and see if its making a narrow range at opening, wait for at
least first 30-45 min(narrower the range better it is), if price making a narrow range
means around 30-40 points in Nifty, around150-180 in Bank Nifty, around 60-80 in
Fin Nifty, Enter long short once breakout happens on either side.
• ATM option better for better premium, SL on either side of range and SL based on
the options chart and make position according to stop loss on option chart.
• This has a high win rate with good risk reward entry but one needs patience to wait
for range breakout for the entry, applicable in afternoon also if it makes a range.
 STRATEGY 5- OPTION SELLING BASED ON 20 EMA
BREAKOUT
Criteria
• This strategy based purely on slopping 20 EMA, it’s applicable only on trending day
and applicable only in mid to late afternoon (preferably after 1.30 pm)
• Look for days with trending day on the first half, where price taking support
support/resistance on 20 EMA or trading away from 20 EMA throughout the day.
• Enter long or short trade once trend breaks and candle closes below or above 20 EMA
with a powerful bullish or bearish candle.
• ATM option better for good premium, SL high or low of days high or low and SL based
on option chart, make position size according to SL in the options chart.
• This strategy high probability only mid to late afternoon (preferably after 1.30 pm)
 STRATEGY 6 -OPTION SELLING AT BUYING OR SELLING
CLIMAX
Criteria
• This strategy based purely on price action with adding higher TF chart like 15 min/30 min or
daily TF, look for mid afternoon parabolic moves on either side where it moves violently and take
reversal trades after taking support/resistance from higher TF.(applicable only till 2.30 pm)

• Look for days where first half was sideways or trending day, and sudden big opposite moves
comes with series of big green or red candles(6-8 series of bullish/bearish or parabolic move)

• Enter long or short trade once price touches the support/resistance and makes opposite candle.

• ATM option better for better premium, SL 100% of the premium with half position, add to position
only if trade is going in your direction and keep SL according to options chart.
• This is a high win rate strategy and very good risk reward trade because of good premium one
can get, but happens very rarely ( this strategy applicable only till 2.30 pm)
NON - DIRECTIONAL BASED OPTION
SELLING STRATEGIES
 STRATEGY 7 - DEPLOYING SHORT STRADDLE & ADJUSTMENT
A short Straddle options strategy works by selling an ATM or same strike Put and Call to
receive a huge premium, seller can make profit as long as the underlying price does not move
beyond the breakeven prices before the expiry, Straddle seller can buy to close the
two options for profit before the expiry as well.
When to use Short Straddle? Days when one expects price to stay within a narrow range
throughout the day or stay sideways till the expiry.
Short straddle can work very well only during high VIX environment where premium are very
high so one can get bigger range.
Max profit potential in short straddle – Maximum profit is the total premium collected.
Max risk in short straddle – Unlimited Risk if there is no Stop Loss or no adjustment.
Short straddle mainly used as a neutral strategy but some traders us it directional based also.
 Price action criteria for Short Straddle
• Days whenever there is very wide CPR in Nifty/Bank Nifty/Fin Nifty, or Select a Day
after a big trending day (means previous day was a big trending day)
• Market has to open inside or near the wide CPR (No big gap ups or gap downs)
• Entry for Non directional based Traders - Enter at first candle close(9.20 am) by selling
ATM Options, start adjusting the position when delta of either of strikes goes imbalance
or whenever strong support or resistance gets broken or keep reference points like either
CPR or S1/R1 pivot broken.
• Entry for Directional based Traders – Enter at 9.20 am, Keep 25% of premium as SL on
both sides of leg, if either of Stop loss hits then cover that leg and keep another leg
open with the Stop Loss, stop loss should be half of 1% capital on each side.
• Exit plan in short straddle – For non directional traders - Just exit at 1% loss if
adjustment is not working even after 2-3 adjustments.
 STRATEGY 8 - DEPLOYING SHORT STRANGLE & ADJUSTMENT
A short Strangle options strategy works by selling an OTM Put and OTM Call to
receive a premium, seller can make profit as long as the underlying price stays
within both the sell strikes till expiry, Strangle seller can buy to close the
two options for profit before the expiry as well.
Short strangle mainly used as a neutral strategy.
When to use Short Strangle? Days when one expects price to stay within a
specific range throughout the day, and stay between that range till the expiry.
Max profit potential in short strangle – Maximum profit is the total premium
collected.
Max risk in short strangle – Unlimited Risk if there is no Stop Loss or no adjustment.
 PRICE ACTION CRITERIA FOR DEPLOYING SHORT STRANGLE
• Days whenever there is a wide CPR in Nifty/Bank Nifty/Fin Nifty.
• Entry plan - Enter at first candle close(9.20 am) by selling OTM call & Put Options
which have 0.20 delta(both on call & put side, either at 0.20 delta or near to that)
(This short strangle strategy can work well on non expiry days also provided
premium is good and it is not a big trending day)
• Adjust the position only if there is difference of 0.20 delta between call and puts
(e.g. Call delta becomes 0.30 and put delta comes down to 0.10 or vice versa)
• Exit plan – While adjusting if strangle eventually becomes straddle then exit (if
trade already in loss) or exit once loss comes to 1% of capital, if in profit then exit
at 3.20 pm, or trail the profit.
(This short strangle strategy can work well on non expiry days also provided premium is
good and it is not a big trending day)
STRATEGY 9 - DEPLOYING DOUBLE RATIO SPREAD

A Double ratio spread is totally neutral strategy where Buying 1 ATM Call and 1 ATM
Put & Selling far away 5 calls options and far away 5 put option(1:5)
When to use double ratio spread? Days when one expect market to stay in a sideway
move or slightly bullish or slightly bearish(but not on trending day)
Max profit potential in double ratio spread– Limited profit potential in this strategy.
Max risk in double ratio spread– Unlimited risk if market goes in trend and goes beyond
the sold option range.
So stop loss of 1% capital is must while using double ratio spread.
 PRICE ACTION CRITERIA FOR DOUBLE RATIO SPREAD
• Whenever you expect market to stay sideways or slightly bullish or slightly bearish.
• Enter at 9.30 am candle if CPR is very wide on that day.
• Buy 1 ATM call and 1 ATM Puts and sell 5 times of Call and sell 5 times Puts (1:5)
( e.g. Buy one Bank Nifty 40500 CE ATM @ 150 and Buy one 40500 PE ATM @ 140, Sell 5
times 40900 CE @ 35 and sell 5 times 40100 PE @ 32)
• Exit plan in double ratio spread– this strategy has high win rate but one should strictly
follow stop loss of 1%, if loss comes near 1% then manually close the trade (strictly
avoid this strategy on trending day)
 STRATEGY 10 - DEPLOYING CALL RATIO SPREAD & ADJUSTMENT
A call ratio spread is a simple and unique strategy where one can make profit whether view
is right or view is wrong, only time one can lose is if the view is totally wrong.
It is somewhat similar to double ratio spread but difference is, here only one side we do
ratio, that is on call side only.
Having a view is very important in this strategy.
When to use call ratio spread? Days when you are sideways or moderately bullish(means
you expect price to only go up till some resistance but not break it), best part of this
strategy is even if market crashes and goes down still one can make profit.
Max profit potential in call ratio spread– Limited profit potential in this strategy.
Max loss in call ratio spread– Unlimited, If trade totally goes in a big trend(on upside) and
crosses beyond sold call option, so either hedge the position or close trade after 1% stoploss
 PRICE ACTION CRITERIA FOR DEPLOYING CALL RATIO SPREAD
• Whenever you expect market to stay in sideways or slightly bullish but only it to go till
some resistance and not go above it.
• Enter at 9.30 am candle by buying one ATM Call and sell 5 times far OTM calls (1:5)
• Adjustment if trade goes wrong– if suppose market start rallying and goes beyond sold
option strike then one can adjust the position by hedging by buying 4 lots of OTM call
options which is above sell option strike, and make hedge on both call and put side.
• If trade is going down against the view, still one can make profit, and to increase the
profit square off earlier OTM sell position(once premium comes to half) and again sell
another OTM call option which is lower strike, if market keep going down then repeat it
but never sell strike beyond ATM buy call option.
• Avoid adding sell position after 1 pm due to chances of big move in late afternoon.
POSITION SIZING & RISK MANAGEMENT IN
OPTION SELLING
 Position sizing on expiry Day Trading
• Position sizing is a technique to plan a trade with specific position size based on capital.
• Pyramid position sizing is a method where you add more capital to trade only if the
trade is going in to profit/in your direction (also called as pyramiding)
• Whole idea of pyramiding is to lose small when you are wrong and win big when you
are right
4th Trade 5%

3rd Trade 20%

2nd Trade 25%

1st Trade 50%

*In pyramiding, always place order in different interval(only if trade going is in your favour) ideally next order should be always
smaller quantity than previous order or same quantity as earlier one, but not higher(small deviation in quantity is fine)
Advantages of pyramiding in position sizing
• You will lose small if trade goes wrong and trend reverses immediately after
your initial entry because you traded only with half size.
• Helps you to keep bigger stop loss because of half position size in initial order
entry.
• You are confident that you are holding on to a winning trade which is going in
your direction.
• And most importantly you will find a proper reference place based on chart to
keep right stop loss after full position sizing.
Risk Management and keeping Stop Loss on expiry Day.
Many traders are successful not because they have powerful strategy but also
because they are good in risk management.
Just one wrong position sizing and not managing the risk enough to wipe off your
entire capital or take away months of profits in a single trade(especially during
black swan event), so risk management is very important in option selling because
of unlimited risk involved in option selling.
Generally option selling have a higher probability of profit as compared to option
buying because of theta advantage, especially on expiry day, so POP (probability of
profit) is given more importance in option selling compared to risk reward (in non
directional based selling)
Non directional option selling has better win rate, but non directional option selling
generally doesn’t give very big risk reward trades, so focus for at least 1:1 RR (Risk
reward) in non directional based option selling.
Directional based trading has a lower win rate compared to non directional trading, but
have very good risk reward, so aim for at least 1:2 RR or 1:3 RR while taking directional
based option selling, wherever you keep SL, Target should be double of that, 20 points
stop loss then Target 40 points, 30 points stop loss then Target 60 points and so on.
Max risk should be 1% of capital in any period of time, even in adjustment if trade is
showing 1% loss then close the trade without doing any further adjustment.
Even after 3-4 adjustment if trade is not going in positive then just close the trade,
don’t do any more adjustment irrespective of whether 1% of stop loss hit or no.
Keeping Stop Loss on expiry Day
Suppose trading capital is 10 lakhs then under no circumstance loss should exceed more
than 10k (based on the rule of max risk is 1% of capital)
Stop Loss Method for directional based Option sellers.
First enter trade with only 50% of the position(as per pyramiding method) and keep bigger
stop loss of 100% of premium collected.
e.g. Suppose trading capital is 10 lakhs, If Nifty premium is trading at 50 at the time of entry,
then keep stop loss at 100 points( total 50 points SL) and trade with 2 lots (100 units) so max
risk if stop loss hits is 5k (which will be half of 1% capital)
If trade is going in your direction, then only start pyramiding as explained in position sizing but
ensure that you adjust your stop loss also from initial 100 points as you are adding to the position.
(Entering the trade at one go also fine in some trades but in such case no more adding to the
position, say entered at 100 then stop loss at 150, and do position sizing accordingly at the time
of entry so that risk is within 1% of capital)
• Position size should be made in such a way that, even if again trade reverses still loss
should not exceed 1% of the capital.
• Every time you do pyramiding your quantity will become bigger, but on other side
your average price also goes up, so ensure that you adjust your stop loss in a place
where if it hits Stop loss then loss will not be more than 1% of your capital.
• Only adding to the position and not adjusting stop loss can lead to very big loss if the
trade reverses and goes against your direction, so remember bigger position size can
give bigger profit but can give bigger loss also if stop loss is not adjusted accordingly.
(This method is for traders who take directional based trades with hard stop loss)

• For traders who are non directional based traders they should manually exit all the
trades once they see their 1% loss of capital is showing on their screen.
Choosing right strike price on Expiry Day.
• Theta decay is highest at ATM options, and premium also highest at the ATM options as
compared to OTM Options, and also ATM options have highest liquidity.
So choosing ATM Options for Option selling have always been a preferred method.
• Far OTM Options are cheap, and them remaining OTM by expiry and becoming zero
has the highest probability, but are not advised to trade in them due to gamma effect
where sometime 2 Rs options can even become 20-30 Rs due to sudden gamma moves.
• ITM Options have highest premium, but them becoming OTM is lower probability, and
theta also least in ITM Options, so only if one is very confident about big move in one
direction then only ITM can be very profitable, but deep ITM have liquidity issues.
So, overall ATM Options preferred for option selling because of good premium
and good theta decay and good liquidity.
Risk involved in Expiry day Option selling
Though expiry day option selling is one of the profitable method in trading but it
also comes with a big risk, unlike in Option buying where risk is limited to only
premium paid.
For e.g., on 20th September 2019 due to sudden positive financial announcement,
Bank Nifty rallied around 10% in intraday, where many OTM call options which
went up multiple times by the time market closed.
Just imagine the loss of a Option seller who sold OTM call options without any
hedge or without a stop loss.
• There are many instances where market rallied or crashed due to some news or
events during market hours which caused big losses to Options sellers who were
having naked sell position.
• So, never ever trade in option selling without Stop loss or without hedging, one
big sudden move can wipe off entire capital or entire profit made over the
period of months.
• Sometimes without any movement in underlying also can lead to loss for Options
sellers called Volatility spikes, generally happens when market is highly volatile,
like before some events or some announcements etc.
• Selling far OTM options because they are very cheap is the biggest mistake one
can make, because 2 Rs options can become 20 Rs in no time if there is big
movement in underlying especially late afternoon on expiry day.
LIVE EXPIRY DAY TRADING VIDEO WITH
TRADE EXPLANATION
Learning from Live Expiry day trading:
Pre market – Mark support/resistance on chart based on previous session,
have a plan whether to be bullish or bearish based on price action.
And where you plan to enter the trade etc.
Live market Entry – Once price comes to pre determined level pull the trigger
without hesitation and immediately keep the SL as per position sizing.
Add to position (pyramiding) only if the trade is going in your direction and
adjust the SL accordingly, If trade is going opposite direction then wait till
stop loss triggers (in direction based trading)
Book profit once price comes near strong support /resistance or as per risk
reward.
Risk management – Ensure that Risk is never more than 1% of capital at
any time.
Eg. Initial trade stop loss at 30 points then Target at 60 points, if stop loss
raised to 15 points then Target should be at least 30 points, as market
going in your direction start adjusting stop loss to keep risk minimum.
But ensure that your Profit Target is at least minimum of 1% of the capital.
Trading psychology – This is most important in Trading, never bring emotion
in the market, once you keep stop loss, be comfortable with that, make
position sizing in such a way that if stop loss hits it doesn’t effect your
emotion (Risk only the amount you are comfortable losing)
Few points before starting expiry Day Trading
• Start with paper trading for few days or start with only one lot until you get some live
market experience(websites like stockmock or opstra good for paper trading)
• Start with Nifty, because Nifty is less volatile compared to Bank Nifty & Fin Nifty.
• While trading in Fin Nifty, keep Nifty & Bank Nifty chart also because many times Fin
Nifty follows Nifty & Bank Nifty price action.
• While trading Sensex keep Nifty& Bank Nifty also, because many times Sensex follow
Nifty/Bank Nifty price action(same applies while Trading in Bankex also)
• Mid Cap Nifty move on it’s own most of the time, irrespective of Nifty & Bank Nifty
price action, but it is a very volatile index.
• All strategies and methods discussed purely Intraday only, not for positional Trading.
• Respect stop loss, never trade without stop loss(in directional based trading) In Non
directional based trading manually exit all the position once 1% of loss of capital hit.
THANK YOU