How to use Strategy Controls for better payoff

In the last chapter, we modified out strategy with the live option chain. But you may not always know how you want to modify your strategy. You may only have a visualisation in mind.

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For example, being bullish on Nifty, I have made a Jade Lizard strategy in the image below. As the market is moving up, I can see profits and as it falls, I face losses. But I’m unhappy with this payoff - there is only very limited profit and unlimited loss!

Wouldn’t it be so much better if I had unlimited profits and limited losses here? That’s where strategy Controls comes in.

It works just like a remote control for your strategy. Here you get 3 main controls -

1. Left - moves your payoff to the left
2. Right - moves your payoff to the right
3. Reverse - reverses your payoff

Let’s see these in action.

Reverse

Just by clicking on reverse, I can see that my entire payoff has changed. But my market view, which was bullish, still remains the same. I am still making profits when the market goes up, but this time I have unlimited profits and limited losses.

My strike prices will be changed automatically, so all I have to care about is my payoff, rather than spending hours on the calculations to achieve this payoff.

From the above payoff graph, it is evident that I make profits only once the market moves a ~100 points to the right. Let’s see how we can change this so we can make profits even if the market moves only 50 points up.

Left

By shifting the payoff graph to the left, I see that at the current market prices, my strikes are recalculated to give me my desired payoff.

Now I start seeing profits once the market moves higher than the price of 18253 for nifty, current spot price being ₹18203.

Right

This works just life the Left button, to shift your payoff to the right. In the same way, your strike prices and options will be recalculated by the option Strategy Builder to reflect this new payoff.

Once you are satisfied with your strategy, there are multiple actions you can take.

1. You can share it with others, even those who are not using Optionlogy, through the Share feature discussed in the next section. (Why is this better than sharing a screenshot?)
2. You can make a paper trade
3. You can trade the entire strategy in a single click with your broker.

We have briefly explored steps 2 and 3 in this chapter, but we’ll take a deeper dive in the next section.