SOP Strategy: Stock Option Positional

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Overview

The SOP Strategy for Stock Option Positional trading is based on the MACD (Moving Average Convergence Divergence) indicator, which provides buy and sell confirmations. This strategy identifies significant buying opportunities when the MACD signals bullish momentum, and selling opportunities when it indicates bearish momentum.

The strategy is designed to capture long trend reversals or continuations by using MACD as a dynamic support or resistance level. It is ideal for traders who want to engage in trend-following strategies based on momentum.

The SOP strategy uses reversal entry levels depending on the market's volatility and range, ensuring clear risk management parameters.

Symbol Meanings on the Chart:

• LE: Long Entry (Call Option Buy)

• SE: Short Entry (Put Option Buy)

• PE: Pre Exit (When neither target nor stop loss is hit, but logic fails)

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Strategy Details

Time Frame: 5 minutes (Positional Trades)

• Market Timing: 9:15 AM to position exit

• Range: 5% (for stop loss and target calculations)

• Stoploss: 1% of stock price

• Target: 1% of stock price

SET TARGET AND STOPLOSS IN STOCK OPTION 1% OF STOCK AND CALCULATE 50% OF THAT 1% OF STOCK THAT WILL BE YOUR STOP LOSS AND SAME TARGET.

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Buy Logic (Long Position)

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

• Once the entry is taken, predefined stop-loss and target levels are set based on the market's volatility and range.

• The strategy works within 5-minute time frames for Bank Nifty options, with different buying ranges and signal times specified for each script.

• The number of signals generated per script depends on market movements and conditions.

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Sell Logic (Short Position)

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

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

• The strategy works in 5-minute time frames for Bank Nifty options, with different selling ranges and signal times specified for each script.

• The number of signals generated per script depends on market movements and conditions.

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Key Points to Remember:

1. Positional Strategy: The SOP strategy is designed for positional trading and works on a 5-minute time frame. It’s an intraday strategy, but the number of trades in a month may be limited depending on market movement.

2. Market Conditions:

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

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

   • Avoid trading in small market movements as it may yield negligible returns.

3. Capital Management:

   • Maximum Capital Usage: Do not use more than 60-70% of your total capital at any time.

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

4. Risk Management:

   • This strategy carries minimal risk while keeping positions for a longer duration.

   • Stop-loss and target levels help in managing risks effectively.

   • It’s suitable for traders with a low-risk appetite.

5. Customization: The default parameter settings are provided, but you can customize them according to your risk profile and capital.

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Disclaimer:

• Market Risk: All strategies are subject to market risk.

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

• Backtest Reports: Backtest results do not guarantee future or fixed returns. 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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