Backtest nifty option strategies


You're ready to take your options trading to the next level. You've developed techniques, and seen those strategies work, and also fail. You've hit it big after a surprise earnings announcement, and also watched big winner drain away as the options premium disappears day by day. It's time to find repeatable strategies. You need science. You need tools. You need weapons to fight the banks and the hedgefunds and the high frequency shops.

You no longer have to ponder one trade at a time. Screen thousands of option backtest results to find the optimum result for your best ideas. Look at average return and amount risked using your commissions and realistic fills. It's time for data, for tracking, for charting for getting edge.

backtest nifty option strategies

It's time to stop guessing about what's working. It's time to use analytics and machine learning to optimize your trades. That's one of the many things we love about the tool. It's made by traders, for traders.

The tool has 3 main areas:. Discover insights is perhaps the greatest hidden gem of all in the product. Curated, backtested, amazing trade ideas from a world class trader. The scanner is an amazingly powerful feature. The CML team has created dozens of strategies, and then runs these strategies every day against all of the stocks in the market. You can then sort the results, filter, and screen all of the backtest results in the market, as well as see when the next earnings event is coming up.

This is the meat and potatoes of the TradeMachine. On the top you can enter 1 to 5 stock tickers, a time frame for backtesting, and how long you want the option expirations to be.

To the left, the strategy, earnings handling and technical signals. With just one click you can then load the scan result into the options backtester to see the results in detail.

OAP 095: Option Alpha’s NEW “Toolbox” For Backtesting Option Strategies

The discover tab is where the hidden magic is. And that's the TradeMachine insights.As many of my readers know, my favorite option strategy is to sell out-of-the-money put credit spreads. The win rate is very high, because we can make money even if the stock remains stagnant or even falls a modest amount. Furthermore, limiting the margin requirement by selling put spreads instead of naked puts substantially increases the trade's rate of return.

Two academic studies - one from and a more recent one from - - ack up my opinion regarding the superiority of the put-selling option strategy, concluding that while many option strategies lose money, put selling is one of the few option strategies that outperforms a buy-and-hold stock portfolio.

The study states on pages 17 and emphasis added :. In agreement with previously presented results and prior literature, many option portfolios have risk-adjusted performance worse than the benchmark portfolio.

However, some option portfolios exhibit risk-adjusted performance which exceeds that of the benchmark stock-only portfolio. Table 2 on page 27 of the study ranks option strategies in descending order of return and selling puts with fixed three-month or six-month expirations is the most profitable strategy. At fixed month or longer expirations, buying call options is the most profitable, which makes sense since long-term call options benefit from unlimited upside and slow time decay.

This study supports my strategy of selling puts with 2- to 5-month expirations and buying LEAP call options with one year or longer expirations. Below is an excerpted reproduction of the study's table 2 for options that have fixed three-month expirations during both year and year holding periods:. I'm not surprised that selling puts is the most profitable options strategybut I'm a bit surprised that selling in-the-money puts is the best strategy. This is probably because the study does not include the horribly bearish stock market period.

If the study were updated today, I bet selling out-of-the-money puts would be the number one options strategy.

backtest nifty option strategies

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The study states on pages 17 and emphasis added : In agreement with previously presented results and prior literature, many option portfolios have risk-adjusted performance worse than the benchmark portfolio.Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express writtern permission of moneycontrol.

There are numerous strategies out there which have been described in various books. But not all are useful to a retail trader. Vikas Singhania Trade Smart Online There is no doubt that the favorite market for most traders be it retail or institution is the options market.

The risk profile suits the institutional investors and the returns potential is what attracts the retail trader. Most retail traders however, end up losing money more often than not, apart from an occasional winning trade. One of the reasons is that these traders do not have a plan and the second is they have the same plan for all occasions. If they feel bullish they buy a call and if they feel bearish they buy a put.

But this strategy is useful in only handful of situations. Further, markets trend less than 30 per cent of the time, most of the times it is moving in a narrow range. The high cost of trading on account of higher brokerages in most conventional broking outfits and higher tax structure in India make most of these strategies uneconomical. A retail trader should look at some basic strategies with minimum number of legs that he or she can use on his every day trade. The key ingredient of using a strategy is to presume what is expected from the stocks or the index going forward.

View on the stock or the market is most important in deciding which strategy to use. Buying a call if you are bullish or a put if you are bearish works only if the market moves in your favour sharply. Markets and stocks generally grind their way up or down and only in few cases do they move up or down sharply. Buying of calls and puts thus does not work in favour in most of the cases. Markets are either trending or are sideways.

Options Backtesting Central

Various strategies need to be adopted in such situations. Sideways or moderately bullish or bearish: Apart from a few high beta or highly volatile stocks most stocks generally move slowly. This strategy is used to earn money when the trader expects slight change in the price of the underlying stock. Suppose a trader holds a low beta or a less volatile stock like a pharmaceutical stock. If the stock is in an uptrend it is safer to opt for a covered call and if it is in a downtrend a covered put strategy should be put to use.

A covered call strategy requires a trader to buy the underlying stock or future and sell an out of the money call option.Enhance your trading strategy with backtesting; use the thinkOnDemand platform for stock backtesting to simulate a trading strategy over a time period to analyze levels of profitability and risk. How great would it be if you could go back in time and learn from your past mistakes?

Maybe you would have taken that job offer, married your high school sweetheart, or passed on drinking that expired milk?

Of course, reliving the past is just a fantasy, right? It lets you replay past trading days to evaluate your trading skill with historical data. The tool has recorded virtually each market tick, so you can backtest stock, forex, futures—you can even backtest options trading strategies—all the way back to December In short, the OnDemand platform is a tool for backtesting trading strategies, that both short-term and long-term investors can use to evaluate their skills.

For those with a longer-term investment approach, you can see how a simulated portfolio would have performed when the overall market was bullish, bearish, or neutral, as well as how world events and macroeconomic news would have affected your profit and loss.

Just keep in mind that results are hypothetical, and there is no guarantee the same strategy implemented today would yield the same results. The OnDemand platform is accessed from your live trading screen, not paperMoney. So, log on to thinkorswim as you normally would. When you are ready to start OnDemand, click the button in the upper right-hand corner of your platform figure 1.

For illustrative purposes only. Past performance does not guarantee future results. Not investment advice, or a recommendation of any security, strategy, or account type. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

Backtesting is the evaluation of a particular trading strategy using historical data. Results presented are hypothetical, they did not actually occur and there is no guarantee that the same strategy implemented today would produce similar results. Market volatility, volume, and system availability may delay account access and trade executions. Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Please read Characteristics and Risks of Standardized Options before investing in options.With the Wheel, you can create and maintain a systematic rules-based options strategy with returns in line with your investment objectives.

Because we started as traders, we understand the difficulty of working with poor data and cumbersome tools. So, we decided to do something about it.

Having a wealth of data built into one easy-to-use tool can help you develop and execute on a strong options trading strategy.

Simply plug in which option strategy you want to test and results appear in seconds. Define your option trading strategy in the Wheel by using days to expiration, delta or percentage out-of-the-money, filter by yield percentages and market width, utilize delta hedging with flexible hedging dates or delta tolerances, and more.

In an easy-to-use interface, you can select a backtest and see the current options meeting your criteria. Execute A strategy is not just some theory; it has to be set in action. Send trades from the scanner, integrate with broker trading algorithms, get live market alerts on your orders, and review executions graphically, all from the Wheel.

We give you data with sophisticated quote cleaning, smoothing algorithms, and calculations of Greeks and theoretical values to aid your strategy. Ease of use Set up exit rules with delta, out-of-the-money percentages, profit percentage, or days left in the trade.

Indicate your special reentry rule for exit triggers. Select delta hedging and use portfolio weighting to backtest a group of stocks together.

backtest nifty option strategies

All in one easy-to-use tool. Depth of options After you set up your backtest, you can use the same inputs to scan in real-time. After reviewing the current market in the Scanner, send options to the Execution Monitor for delivering to brokers. You can track filled or paper traded options to the Exit Monitor to produce profit and exit alerts. Pricing We offer an array of customized pricing options. We also scale pricing based on your needs. Backtest Scanner Develop your options trading strategy.

What It Does.


Product Features. What's New. Options trading tools have always been either hard to use or crippled by incomplete or insufficient data. Quality data Perhaps the most important and least appreciated part of backtesting is the underlying options data. Get microscopic with the data. Want to take a deeper dive into options data?For Bank Nifty future, people are using many strategies; Some are using indicators, some are using support and resistance, some are using trendiness, etc.

If you are looking for the best intraday strategy for Bank Nifty Future, then this is for you. We are using price action, we calculate a range for intraday based on the first 30 minutes trading activity, and based on that range we are taking our trades. In my every post, one word is common, that is Risk Management. Risk management is the only holy grail to success in this market. In this strategy, if you look at the Risk: Reward ratio 4.

This strategy is generating a This strategy is purely intraday. Example: Suppose we got a long signal at AM and we initiate a long trade, later around PM we got a sell signal, which means we have to square off that long trade and initiate a Short trade and will hold that trade till PM.


After took suggestions and feedbacks from our clients, we did some modifications in terms of risk in our Bank nifty future strategy. Now we are using a fixed 0. Above is the performance report from 1st January to 6th February with just 2 lots and transaction cost 0. These are monthly charges. You have to subscribe every month. The discount is valid for the first time only.

For higher plans discount, please contact us on WhatsApp or through the chat window. After successful payment send us a mail at support repleteequities. For more details visit our telegram channel. Click here. Answer: yes, Every alert you will get is automatically system generated. Free from all human emotions and errors. Answer: Yes, Once you get an alert, you can place a limit order with points buffer.

If the price is above 20 points just keep a limit order. Answer: Yes, of course, you can contact anytime on WhatsApp or Telegram. Answer: Right now, we are not planning to sell this Bank nifty future strategy, but in the future, definitely you will get this strategy.

Keep following our blog.Traders often jump into trading options with little understanding of options strategies. There are many strategies available that limit risk and maximize return. With a little effort, traders can learn how to take advantage of the flexibility and power options offer.

With this in mind, we've put together this primer, which should shorten the learning curve and point you in the right direction. This is a very popular strategy because it generates income and reduces some risk of being long stock alone.

backtest nifty option strategies

The trade-off is that you must be willing to sell your shares at a set price: the short strike price. To execute the strategy, you purchase the underlying stock as you normally would, and simultaneously write or sell a call option on those same shares. In this example we are using a call option on a stock, which represents shares of stock per call option. For every shares of stock you buy, you simultaneously sell 1 call option against it. It is referred to as a covered call because in the event that a stock rockets higher in price, your short call is covered by the long stock position.

Investors might use this strategy when they have a short-term position in the stock and a neutral opinion on its direction. The holder of a put option has the right to sell stock at the strike price. Each contract is worth shares. The reason an investor would use this strategy is simply to protect their downside risk when holding a stock. This strategy functions just like an insurance policy, and establishes a price floor should the stock's price fall sharply.

An example of a married put would be if an investor buys shares of stock and buys one put option simultaneously. This strategy is appealing because an investor is protected to the downside should a negative event occur. At the same time, the investor would participate in all of the upside if the stock gains in value. The only downside to this strategy occurs if the stock does not fall, in which case the investor loses the premium paid for the put option.

With the long put and long stock positions combined, you can see that as the stock price falls the losses are limited. Yet, the stock participates in upside above the premium spent on the put. Both call options will have the same expiration and underlying asset.

The trade-off when putting on a bull call spread is that your upside is limited, while your premium spent is reduced. If outright calls are expensive, one way to offset the higher premium is by selling higher strike calls against them. This is how a bull call spread is constructed. In this strategy, the investor will simultaneously purchase put options at a specific strike price and sell the same number of puts at a lower strike price.

Both options would be for the same underlying asset and have the same expiration date. This strategy is used when the trader is bearish and expects the underlying asset's price to decline. It offers both limited losses and limited gains. The trade-off when employing a bear put spread is that your upside is limited, but your premium spent is reduced.

If outright puts are expensive, one way to offset the high premium is by selling lower strike puts against them. This is how a bear put spread is constructed. This strategy is often used by investors after a long position in a stock has experienced substantial gains. This is a neutral trade set-up, meaning that you are protected in the event of falling stock, but with the trade-off of having the potential obligation to sell your long stock at the short call strike.


Again, though, the investor should be happy to do so, as they have already experienced gains in the underlying shares. This strategy allows the investor to have the opportunity for theoretically unlimited gains, while the maximum loss is limited only to the cost of both options contracts combined.

This strategy becomes profitable when the stock makes a large move in one direction or the other.

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