Video summary

HNI Style Option Trading Strategy Explained | Kundan Prajapati

Main summary

Key takeaways

Finance

Core Idea

  • The speaker presents a weekly option-selling strategy designed to make money in multiple market directions (not only when the market rises).
  • It’s framed as a “zero adjustment,” rule-based approach:
    • No charts
    • No indicators
    • No Greek/IV/gamma “adjustments” mid-trade
  • Holding period: maximum ~5 days
  • Exit discipline is emphasized throughout.

Options Market Framing (Why Selling)

Cash / investing vs options

  • In cash/investing, the market is typically considered as three directions:
    • Bullish
    • Bearish
    • Sideways

Why option selling (as explained)

  • The speaker argues that option selling can benefit from more outcomes because the strategy targets:
    • Probability
    • Theta / time decay
  • In contrast:
    • Option buying generally needs directional momentum (e.g., bullish needs upward momentum).
    • Option selling is framed as having an advantage where winning probability is ~70% (speaker claim).

Methodology (Step-by-Step Framework)

Trading Schedule & Setup

  • Underlying/instrument: NIFTY (referred to as “NiFi”)
  • Strategy timing: weekly strategy, with their use of bi-weekly expiry based on remaining days (~8 days left in their explanation)
  • Entry day: Mondays
  • Fixed timing rule: enter on Monday at 9:45
  • Execution style: no discretionary chart reading, no indicators.

Trade duration

  • Hold up to 5 days
  • If the next Tuesday is treated as weekly expiry, they describe the setup as bi-weekly when there is ~8 days left (per their explanation).

Targets & Stop-Loss (Risk Management)

  • Immediately after entry, apply fixed percentage exits:
    • Target: +1%
    • Stop-loss: -1%
  • No in-between management (optional automation may be used).
  • The rule is also described with daily MTM discipline:
    • Exit when the position reaches the profitable zone, rather than holding until expiry.

Strike Selection / Structure (Call Ratio Spread + Hedging)

  • Structure uses a call-buy / call-sell ratio.

Example structure (as given)

  • Assume Spot = 26,000
  • Buy:
    • CALL 200 points OTM: 26,200 for 1 lot
  • Sell:
    • Calls further OTM: 26,400 for 3 lots
  • This creates a 1:3 call ratio.

Hedge mechanics (as described)

  • If the price moves further (example: 26,600, roughly ~200 points further),
    • then buy 2 lots to convert “unlimited risk” into defined risk.

Risk intent (as emphasized by the speaker)

  • Downside risk is framed as minimal/defined, since the approach is described as “only making/selling calls.”
  • Upside risk can create losses on large moves, which is why:
    • hedging is referenced
    • strict ±1% exits are emphasized.

Profit Timing Rationale (Theta)

  • The payoff is described as benefiting when the underlying stays within a range.
  • They reference theta behavior with examples like:
    • roughly ~300–400 points from entry
    • and notes like “100 points below still potentially safe” (as mentioned)
  • They claim profits frequently appear within 2–3 days, hence the strategy does not require holding until expiry.

Key Numbers & Explicit Claims

Performance / probabilities (speaker claim)

  • Winning probability: ~70%

Profit vs loss (as discussed)

  • Maximum profit: ≈ ₹12,000
  • They describe maximum profit as “almost 1:1” relative to maximum loss (later backtest figures show loss magnitudes explicitly).

Timing

  • Profits often appear in 2–3 days.

Money Management / Return Targets (context)

  • “Target 30% return” is mentioned as a benchmark (from earlier slide discussion).
  • Personal approach described:
    • aim for max 5–6% of total capital per year
  • Example allocations:
    • ₹1 lakh in Government Security Bonds for ~7.5%
    • mentions “currently 7% on ₹10 lakh”
  • Weekly expectation example:
    • claims 0.5% per week, illustrated with:
      • ₹5,000 vs ₹10 lakh
    • ~30% annualized in that context.

Backtest (Speaker Claims)

  • Backtest period: September 2025 to January 2026
  • Number of trades: 20
  • Accuracy: 75%
    • Lost 5 times
  • Profitable trade profit: ₹800 (backtest of ₹1 lakh)
  • Losing trade magnitude: ₹6,600 (average loss referenced as “6600”)
  • Maximum drawdown: only 1%, with a claim of never more than 1% (speaker claim)

Explicit Recommendations & Cautions

Recommendations (what to follow)

  • Stick strictly to the rule set:
    • Enter on Monday at 9:45
    • Use their prescribed strike selection
    • Exit at ±1% (target/stop)
    • Avoid discretionary, chart-based adjustments

Cautions (what to avoid)

  • Biggest risk highlighted:
    • large gap-ups (example: “gap up 400 points” repeatedly mentioned)
  • Strategy is described as limiting downside shock, but:
    • extreme upside jumps can still cause losses
  • Avoid trading around known events:
    • Budget month events / spikes
    • election results
    • “meeting” type events (names unclear)
  • “Systematic trader” mindset:
    • don’t intervene emotionally.

Instruments / Assets Mentioned

  • NIFTY options (referred to as “NiFi”)
  • Government Security Bonds (G-secs / G-sec)
  • ETF: “Lt Gilt Bees” (described as an ETF of G-sec)
    • speaker attributes ~90% interest-free margin (via broker) and claims return ~8%
  • No specific equity/company tickers mentioned.
  • “Trump” is referenced as a macro/news risk example (not an instrument).

Disclosures / Disclaimers

  • The subtitles mention strategy education and “backtesting/forward testing,” but the provided text does not show a clear “not financial advice” disclaimer.

Presenters / Sources Mentioned

  • Ansh R Hiran — host/interviewer
  • Kundan Prajapati — trading scholar / main presenter
  • Mentioned platform/source: Upsearch (strategy posting and backtesting context)

Original video