SOP Strategy: Stock Option Intraday

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Overview

The SOP Strategy is an intraday stock option strategy based on the MACD (Moving Average Convergence Divergence) indicator. It aims to capture trend reversals or continuations by identifying bullish and bearish momentum. This strategy works for both long trend reversals and continuations, making it suitable for traders who prefer trend-following strategies.

The SOP strategy is designed to identify:

• Buying opportunities when the MACD signals bullish momentum.

• Selling opportunities when the MACD signals bearish momentum.

Symbol Meanings on the Chart

• LE: Long Entry (Call Option Buy)

• SE: Short Entry (Put Option Buy)

• PE: Pre-Exit (No target hit or stop loss, but logic failed)

• SL: Stop Loss

• TP: Target

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Strategy Details

Time Frame: 5 minutes

• Market Timing: 9:15 AM to 3:15 PM

• Stoploss: 25% of premium price

• Target: 100% of premium price

  

  Set Lot size as per stock

The strategy is designed to work effectively in 5-minute time frames, specifically for Bank Nifty options. It generates signals based on market volatility and price movements.

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Buy Logic (Long Position)

• A buy signal is generated when the market crosses above the MACD line with a specified range in spot price.

• After entering the position, predefined stop-loss and target levels are set based on the market's volatility and range.

• Targets and stop-loss levels are calculated as 1% of the stock price with 50% of that 1% as stop loss and the remaining as the target.

Sell Logic (Short Position)

• A sell signal is generated when the market crosses below the MACD line with a specified range in spot price.

• Like the buy logic, predefined stop-loss and target levels are set based on market volatility and range.

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Key Points to Remember:

1. Intraday Strategy: SOP strategy operates on a 5-minute time frame, meaning the number of trades may be limited. It is designed for intraday trading and may not generate signals every day, depending on market conditions.

2. Market Conditions:

   • The strategy works best during market rallies (either buying or selling rallies).

   • In a sideways market, the strategy may produce no profit/no loss situations.

   • Avoid trading in small movements as it may result in minimal gains.

3. Capital Management:

   • Maximum Capital Usage: 50% of your total capital should be used at a time.

   • Minimum Capital Required: For the SOP strategy, a minimum capital of ₹25,000-₹40,000 is required. Additional capital may be needed as you scale up.

4. Risk Management:

   • The SOP strategy is designed with minimum risk for intraday trading.

   • Predefined stop-loss and target levels help ensure effective risk management.

   • It’s a safe strategy for customers with low-risk potential.

5. Customization:

   • Default parameters are provided, but you can customize them based on your risk profile and capital.

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Disclaimer:

• All strategies are subject to market risk.

• No guaranteed returns: We do not promise or assure returns. Trading results depend on market conditions.

• Backtest Reports: Do not guarantee future or fixed returns. They are based on historical data, and actual performance may vary depending on market movements.

• Trading Risks: Trading in Index Options is inherently high-risk. Always trade within your risk tolerance and avoid excessive risk.

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Contact Information:

For more details or personalized assistance, feel free to reach out:

• Email: [e-mail]

• WhatsApp: [phone] (Vivek)

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