Step 3 D- Special Options Adjustments Strategies

Welcome to one special article regarding the options trading strategy. So, let's understand the special strategy we are going to discuss but before that let me give you one disclaimer that these are not the only way you can adjust your strategies. There are several ways or thousands of ways you can adjust the strategy. These are the more common famous way of adjusting your strategy when the market moves against you and you are stuck right. So, please don't confuse with as there is this adjustment also, that adjustment. There have a thousand-way one can do the adjustment depending on the situation, the capital, the expertise right. So, lots of things are required to adjust. I am telling you most of the common adjustment strategies.

we are going to discuss the leg treatment. Of course, it's not your leg treatment. It's a leg of strategy treatment right so don't look at your leg and say oh, what happened to my leg okay. Your leg is fine. When the strategies leg has to be used that how you're going to do an adjustment that's I’m going to tell you in this article. Then I’m going to tell you the delta hedging right. So how you can do delta hedging and you can save your strategy in most of the cases.

You can come out with profit as well so delta hedging is very important or you can say beautiful adjustment. I have done testing myself and trust me if you do delta hedging properly and you have enough capital right, you can come out with any bad situation such a good thing. So, maybe in the future maybe when I discuss the strategy, I will tell you one strategy only which works only on the base of the delta.

I will tell you that strategy soon okay and I tested that strategy work very well. The third important part futures so you can use futures also but there is a certain situation. What are those situations? I’m going to tell you now right and don't run away after that then I’m going to tell you how you can convert or you can shift your one strategy to another strategy in the last article also I told you that sometimes we have to convert the shape of the strategy itself like if it is. We started with straddle but suppose something wrong happens, then we can convert into strangle.

Then after straddle and strangles, we have very beautiful Nightingales. So, Nightingales is like uh one strategy where you just double up. You go up and you double up but it requires a lot of capital because Nightingales cannot be owned by the poor.

It is a rich person's adjustments okay and then last is, of course, there are thousands of ways and there can be your way of adjustment that all comes through when you go practically and when you understand the positions the future and options then you can come up with your style of adjustments and trust me, I can give you thousands of ways of adjustment but your way of adjustment always going to be more important because that adjustment you understand much beautifully. And of course, next, we are going to talk about exits that are the step number four the last step and it is a very small topic so in one or two articles, it will be over and then we're going to start and learn some exciting strategies which make us money right.

The leg treatment is very simple. We only treat the leg which is going to be in problem. For example, every human has two legs and if one leg is infected, so the treatment is only going to be on the infected or wounded leg. You can't put a bandage on both legs right. Same way here what we think we are going to treat only the wounded or the leg of our option strategy which is in trouble.

Let’s understand Delta hedging. So, now there are some strategies which are delta hedging. Delta hedging strategies are basically when we keep our delta zero right. So, what will happen we enter into a position in which we sell a call, we sell a put and we keep our delta of the position near to 0 not exactly 0 but near to 0. It can be twenty but whenever it goes below a point for example say delta increases to fifty right. So, what we do?

We do the adjustment and we bring delta back to near zero. So, it can be involved buying a call, selling a call or buying more calls or selling more calls, or buying more puts. So, like that and we keep doing the adjustments as long as our delta is in a range of say 10 to zero. We just keep doing the adjustment so that's called delta hedging and this adjustment happens with a lot of money because sometimes what will you do? You will sell a call and sell a put and then the market will move here or there and you will keep balancing. It's a very active kind of strategy. So, you have to give a lot of time and a lot of money to that so that is called delta hedging.

The third is the use of futures. So, here I am going to share with you one very important tip and that is when to use options and when to use futures to adjust. So, first of all, you understand you enter into one strategy. Now, what happens if the market goes slowly in some direction. You can adjust with options but if the market goes quickly in one direction, you have to adjust through the futures. I hope you understand the article. If you want to learn more and want to take your journey to the next level, then watch the video which is attached above. You will learn more.