Options trading with SAR and Futures

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Time frame: 30 minutes
STOCHA (40,1,1)
RSI (14)
EMA(12), EMA(34)
Entry for long: EMA(12) crossover EMA(34), Stocha > 50, RSI > 50 (All conditions should be satisfied)
Entry for short: EMA(12) crossover EMA(34), Stocha < 50, RSI < 50 (All conditions should be satisfied)
Since this is a SAR system, trader will be in either long or short any point of time. No
stoploss but just reverse the position and hold.

1. Yes, you can use the same system for BankNifty, higher volatility compared to Nifty. Stocks that you
mentioned are of different volatility based but definitely volatile. If you use same parameters, you should
be able to accept the whipsaws during the trendless mode and you can definitely rewarded MORE when
trending trades come. I always suggest for higher volatile stocks, go higher time frame instead of 30
minutes (currently using for NIFTY trades). It reduces the whipsaws.
2. Part booking and re-entry will be considered once everyone is comfortable with the current SAR. I
always mention, in case if anyone miss to enter into the SAR SHORT/LONG, enter at the pullback (near
to 12EMA/34EMA) so that they can join the SAR trend. However this can be little risky for the newbie and
senior traders can do this anyway. If you prefer to book profits, then I recommend 20 points (for intraday
trades) and 50/100/150/200 for partial booking (if trader trade more than 1 lot, then book profits one lot for
50, second for 100, etc and last lot hold till SAR reversal). But I do not recommend this for the newbie.
Hope your questions are answered.

In sideways market, too many signals come in RAJA_SAR system. Here are couple of rules to follow:
1. Check RSI level when reaching to 60 level. Trail the longs.
2. Check RSI level when reaching to 40 level. Trail the shorts.
General rule:
3. When stochastic reached to 0 (only during candle formation it shows, not after forming candle), try to
close shorts and normally market bounce 40 to 60 points in Nifty and 100 to 150 points in BankNifty.
wait for divergence when stoch reach 100.

RAJA SAR 2.0 with Money Management Mix. This enforce the trader to have discipline and make the
trade smooth and less risk (almost zero risk to capital). This technique cover the gap down/up scenarios
and range bound scenarios. No matter where market goes, trader gets money into account. Only concern
for traders can be the capital requirement. Yes, trader need 3 lots of capital for trading one lot of future.
But returns are assured no matter how market reacts. This technique I have seen in one of the forum and
also saw in Navaneeth trades. Adding this Money Management mix safeguards the trader from risk and
smooth sail during the trades. Feel free to post your questions if you have any
This is for your query. Pls read it slowly & understand the trades. Open the above chart & study (#89)..
Let me explain. A 1} Nifty: Buy triggered @ 6780 as per SAR. (Date : 17-April-2014). Lets say I'll buy 3
lots (Just for illustration purpose). A 2} I'll hedge the Index with 6800 CE Short (May series) @ 300.. - 3
Lots.. A 3}In Index, 1 Lot I'll book @ 6830, 2nd lot @ 6880. 3rd lot when downside cross over of EMA
happens - In this trade it crossed @ 6830. So Total profit in Index is 200 Points for 3 lots. {And none of
6800 CE shorts booked} B 1} Next Short sell triggered @ 6820 (Date:28-Apr-2014). I'll sell 3 lots (Just
assume) & Hedge it with 6800 PE Shorts (Of course may series) @ 240 {Again 3 Lots}. B 2} So now I
have 3 lots Index shorts, 3 Lots 6800 CE shorts, 3 lots 6800 PE shorts. B 3} 1 Lot I'll book @ 6770, 2nd
lot I book at 6720. 3rd lot I'll book when EMA's enter buy mode. In this trade it happened at 6750 on May
9th. So total profit will be 220 Points in Index.
17/04/2013 EOD SAR UPDATE.

SAR LONG going good. Current running profit: 431 points for two lots.

Respected Raja sir, 1000 thanks to your system. as I am forex trader, I was using almost same
system + parabolic SAR In day chart to trade in EUR/USD$ .. ITS A GOOD STARTEGY.. My
question is 1} can you please explain if market in range bound (See Nifty charts in September October month) .. What 1 can do in that situation. 2} My second question is can you pls pls
elaborate option trading strategy using this method. (Give me some examples with 5700 ce 5600
pe etc..) Why did you said to short the PE + CE not to BUY them? Any differences? PLZ Enlighten
US.. Thanks in advance..
First of all do not call me as 'sir'. I am a fellow trader like you and trying to share knowledge to the new
traders. Like Bhavesh ji said, "You cant earn in long term by just following others call. Start

learning today. " Just trying to learn and sharing what I learned.

To answer your questions 1) Well, even in range bound market also you will be getting points, but may be
not too good number of points like the way we are getting now.
2) Yes you can trade using this system for options trade. But sell the options instead of buying. Whenever
a SAR Short happens, then you can sell ITM calls and whenever SAR Long triggers, try to sell ITM puts.
Advantage in doing this is 'theta' component is guaranteed to your account.
Per say, if we buy call option when SAR long triggered (i) in trending market you get huge profits (as a
trader we do not know whether it is really trending or not). (ii) in non-trending market, futures may move
up and down and finally one day if SAR give next trade (opposite to the current trade), during that time as
a trader we may loose the premium in the calls/puts. Just see the prices of 5600 CE when the SAR long
is triggered (latest one) and see the prices when Nifty reached towards 5600 level and just before last big
rise. You can understand that the premium will not rise easily until the big big trending moves comes in
Hope this helps you.
Okay :-) Thanks again. But everyone tells us to selling the options is risky job .. so I asked. will see &
understand these Theta/ ITM calls matter as I am new to options .. will do it in paper for few months then
will try it on real trade if it succeeds .. however we are minting smart with this technique in nifty future . So
no worry .. But for knowledge I asked OPTIONS trading. Won't do it without back testing .. Another thing
is if we apply this strategy in stocks, which all stocks you suggest this strategy works most? (you said
volatile stock, I saw that.. But in specific which stock futures in your mind / back tested?
Cheerio.. Keep it Up friend ..

I said to look at October month's chart.. Except October month, This strategy almost gave 400 points in
every month.. I checked it .. so my point is what traders should do in these situations.. Look at the chart ..
It almost gave 8 loss trades .. Any other indicator to avoid this whipsaw, or we should look at bigger time
frames like 1 hr - 4hr .. (I am not asking you to give 100% perfect strategy.. it's not possible also) Just
checking - can we avoid these types of calls/signals in this SAR?
Thanks again. Will back test some months again, bcz i won't easily adopt a system without back testing
for many months. From last may i have calculated in Nifty. Minimum 350/370 points in 1 lot per month.
(Not exactly, But average up to this April) .. so it seems very good system. As I have seen, it works good
with large capital stocks (axis, sbi, Rel, LT) Not that much with RNRL, Jet airways, BPCL etc .. However I
am still testing this with stock futures. Till that Cheerio :-)

bt raja sir when will you cover both short pe and ce positions?? for eg right we should have short position
in future nd we hv sold put nd having previous short ce...three positions..so if at next crossover i will cover
my future nd go long..now what to do with options??

ajjain: We only shift future position when SAR triggers and options position remain till the premium is
rajapvt: if we sell atm option, the gain in NF will be offset by matching loss in sold atm option, specially in
case of trending market. Will it not be better, as a rule, to buy otm option. For example, the short trade
triggered on 13.6.2014 at 7609. If I am initiating trade for the first time i should short NF at 7609. As per
your strategy we should sell 7600p at the same time. If market keeps trending to downside till June expiry,
there will hardly be any net gain as gain in NF will be offset by loss in sold put. Instead of selling 7600p,
will it not be better to buy 7700c or 7800c for hedging the risk. Of course the prem. will be lost, but
position is safe. In case market whipsaws loss will be a little higher. Your thoughts on downside of selling
options in this strategy.
bpsingh ji, this will happen first time. then onwards in second trade you will have more gains. I never
prefer buying options after learning the hard lessons in the market. I know the option writers big game. If
the short trade initiated on Friday @7609, sell the highest premium put option (per say 7600 PE @80).
For the first trade your gains in NF will be offset by NF put option. But once the second SAR trade starts,
you will understand the gains. Just do a paper trade on this for now and understand the logic. Trader RM,
MM, TM taken care and trader can sleep well with trade position carrying overnight. This Friday
downmove is booked all intraday as per my understanding. I have resumed after 2 months break and little
delayed in catching up the trend. But let's see how the market say about this going forward. There is one
gap left in the top which might be filled and uptrend resumes. Since I am trend follower, I am not
supposed to expect market moves. Even in worst case also (if the downtrend continue), trader will still be
in gain of the premium (80 points) of the option, which might come around 6% of returns on investment in
15 days trade. Will keep posted the RAJA SAR trades in the thread as soon as I get ample time.

As mentioned, Friday downmove is over and now the reversal started and might have triggered the SAR
longs. Those who have taken the SAR short @7609 and shorted PE @80 should have shifted their future
shorts to longs and highest premium CE might have shorted. Now the premium game will start again.
As mentioned in @195 post, the gap got filled and market resumed uptrend. Let's hold the SAR trades
who is following SAR levels.
Those who have traded based on the money management mix will understand the profits on premium in
this kind of sideways movement in market.
Thanks bpsingh ji for bringing me the attention how you are wrongly calculating the RAJA_SAR strategy
in Nifty. I got the data and sharing the complete picture. If I ignore the first buy signal that came in Jun 2nd
@7339 and a sell came @7609 (just 300 points rally approximately). Now count from the sell that came
from 7609 onwards, I got only 3 RAJA_SAR signals after that. Here is the data and chart for your
reference. There are other guidelines related to stochatic, rsi that is posted in the thread which I have not
accounted in this computation. If I count that rules, then net gain is much more than what is given. So for
15 days trading RAJA_SAR MM mix is giving 70 points gain (in the trendless market). If I include the
trending market it will be much more than what we see here. Please refer the chart and discuss if you still
have any difference in opinion. But refer against with right data.

Rajapvt ji, the best thing will be to keep a log of trades here. Let the first trade be the one taken
yesterday:- NF Buy @7617 and Sell 7600c @180 (both July contracts). From here onwards, you can
post all the trades as they happen immediately after the trigger candle, as was done yesterday. That will
be the best way to track performance of this strategy.
bpsingh ji, Regarding the updates, I may not be available to update all the trades here during market
hours as I am working on a project. I might update end of the day if any trade is triggered during market
hours. By the way, Navaneeth mastered this system already and he can share his views whether trade
triggered or not if he is available online at that time. You can check with him if you have any questions
also. I have update the thread initially with all live trades and seems you were not there at that time.
Please go through the thread and see the trades happened at that time with your data for back testing. I
have not updated the thread quite sometime being the reason trader should be able to follow the system
without any guidance and earn. If you believe the system works, then follow diligently without leaving
even a single trade without any thought process and just follow the rules and guidelines of the defined
system. Can you check your entries how they came? Something was wrong on the entries you have
mentioned in the above thread.
SAR Short triggered today, NF Short @7565, 7600PE@175, 7600CE @143 (holding). Now wait for Long
to trigger. Just keep watching market and enjoy market movement.

bpsingh ji, Are you watching the market and RAJA_SAR trades? I thought you are a regular trader and
doing trades. I am posting the updates for your and fellow traders for this week. Hope you will come back
and see the update.

RAJA_SAR Long triggered. NF 7608 long taken, Options holding without any change. Will post details
once get free time
Longs taken @7608 did a part booking at 775x and reentered at 7703.
4 Jul 14, 12:53 PM rajapvt: RAJA_SAR update: Added the previously part booked positions again

Though my trades are different and not just using RAJA_SAR, posting the results of the system with
Money management mix. Patience and Systematic approach pays the returns. Trader just need to read
the chart without bias and follow trend. Trader often get deviated from the distractions due to other
players trading systems, numbers and targets. Just have faith and follow religiously.
Nifty PE+CE written @180 & 175 are now trading at @187 & @4.15 as on today EOD.

I am into option writing of next series and also in current series. Just trading without applying any
Few things to say here:
1) If some one has 2 Lakh Rupees, He shouldn't trade 6 lots. It will be bad (Or I may call it worst)
money management .. (If someone get impressed & start trading immediately after seeing those
2) If you have 2 lakh rupees just trade 3 Lots..
3) While the data is almost correct (26- Jan falls on Sunday, Wondering how did he managed to
book profits. :-) Many other things I have to correct, But lets just ignore it ) No one can sleep with
6 lots in hand taking consecutive 3 loss trades {14th march to 24th march}. It will wipe half of your
money. After many profit trades you may be able to bear such wipsaws. But think about newbies.
If he enters the trade on 14th march, what happens to his account? 50% loss in 1 week. Oooops.
The word "NIGHTMARE" isn't enough to describe it. Even you take PRO's, such draw-down isn't
acceptable with any system..
4) I always think on worst scenario. Just think, If some one buys 6 lots (With 2 lakh Rs in hand).
Very next day market may open 200 points down (Don't ask the reason, you name it - Iraq war,
Nuclear war, USA president's flight missing, Biggest terror attack, Unexpected Federal rate hike.. )
Where you will be standing?

5) Develop a method that doesn't have such draw downs & you can sleep in the night. If you
trading SAR alone, Then for 2 lakh Rs you should trade only 3 lots (Maximum) Or just follow the
hedging that we're (Me +Raja PVT sir) using.. In this hedging method, we say to trade only 2 lots
for 2 lakh rs n hedge it with 2 lots of options.
6) All those loss trades really shouldn't be taken as we can use divergence to early Exit/Entry..
(Ex: 23rd June Buy entry)
7) Options hedge did offset those huge losses. Moreover it converted it into good profit trades..
(At least 30/40 points even in worst scenario)
8) My portfolio never saw a loss trade with hedging..

Happy Profitology :-)

first of all i would like to thank you & congratulate you for posting such a nice strategy of hedging
combined with sar. but i would like to ask that instead of hedging near price call or put isn't it better to
hedge with option which is bit further from current price. if price is small then may be 2 lots? because
these options will rise less in percentage if trade goes against out future trade. please advice.

Simple. You won't get Premium to eat.
Qstn: if price is small then may be 2 lots?
Ans: No matter price is small or big, You need same margin as much as for Index (25-30 K)
for 1 lot.

thanks for your replies.
you are right that investment will certainly increase for 2 lots but if we are taking out of money call or put
then chances to eat premium is more as those targets may not achieve. ( now currently sar has given sell
at around 8140 so which put we should short? 8000? 8100? 8200? 8300? )
please guide. thanks again

Dear nimdho: Currently NF trading at 8133, 8200PE @113, 8100PE @64 & 8000PE @34. Actual
premium should be (for simple calculations) 8200-8133=67, 8100-8133=0, 8000-8133=0. Considering the
highest premium that we have is 8200PE. Please go ahead and short 8200PE along with NF short
@8140 levels. (Trade as per RAJA SAR MM mix rules).

EXP @ 0

27-8-14 LONG @ 7933
EXP @ 10

SHORT @ 8139


LONG @ 8087


SHORT @ 8060








It was mentioned that the 30 minutes time frame suitable for Nifty (it is been back tested earlier and
using). If you want to apply this system for other, you may need to finetune the time frame for others.
Please check higher time frame for the high volatile stocks. But the problem will be reversal will be far
away normally at higher time frames.
Nimdho Ji, For bank nifty you have to select 1 Hr Time Frame. Then it works fine. But trade with caution
bcz some times you may have to take 300-400 points s.l (You will get double if you have some patience).

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