Strategy description

Overview:

This is a rule-based directional option selling strategy on NIFTY Weekly Options with built-in hedge protection.
The system identifies short-term directional momentum and takes a single directional position (CE or PE short), always coupled with a far OTM hedge to cap risk.
It is an active positional strategy, capable of taking 4–6 trades per day, and can carry positions overnight if the directional signal continues into the next session.

Core Logic:

1. Trades only NIFTY Weekly Options for better liquidity and time decay advantage.
2. Executes one directional setup at a time — CE short or PE short.
3. Each sell position is paired with a far OTM hedge for defined maximum loss.
4. Takes 4–6 trades per day, depending on market volatility and signal frequency.
5. Positions can be held overnight when trend conditions remain valid.
6. Fully system-driven logic — no manual or discretionary actions.

Key Features:

1. Fully hedged structure – every trade protected with a far OTM hedge.
2. Directional and active – adapts quickly to trend shifts or reversals.
3. Works effectively in volatile weekly expiry environments.
4. 4–6 trades per day provide sufficient activity without overexposure.
5. No naked positions – defined risk at all times.
6. System auto-reverses when the trend flips, ensuring constant alignment with market direction.
7. Balanced approach combining intraday agility with positional flexibility.

Capital Requirement:

1. Recommended Capital: ₹1,80,000 (including drawdown buffer).
2. Structure per trade:
   1. 1x Short Option (CE or PE, current week expiry)
   2. 1x Far OTM Long Hedge (same expiry)
3. Margin structure designed for multiple daily trades with buffer for MTM swings and repairs.

Performance & Risk Control:

1. Daily risk cap: ~0.1% of capital (≈₹180).
2. MTM tracking and exit logic to limit intraday drawdowns.
3. Each trade hedged to prevent large losses due to sharp moves or gaps.
4. Repair/reversal mechanism activates automatically on trend change.
5. Prioritizes capital protection and steady compounding over high-risk returns.

Holding & Exit Rules:

1. Typical holding period per trade: 30 minutes to several hours; may extend overnight if trend sustains.
2. Exit or reverse when the opposite directional signal is triggered or when daily loss cap is hit.
3. All open positions are fully exited before Thursday expiry to avoid settlement risk.

Disclaimer:

1. Adithi Innovations is not a SEBI-registered advisor.
2. This strategy is intended purely for educational and informational purposes.
3. Past performance is not indicative of future returns.
4. It is strongly advised to paper trade for at least one month before deploying real capital.
5. This strategy involves active positional exposure in NIFTY Weekly Options, but with defined risk through continuous hedging.