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How to Test an Options Trading Strategy Using Opstra Definedge Analytics?

Updated: Jul 27

As a trader, you know that options trading provides unique opportunities to profit. However, simply buying and selling options without a plan is risky and can lead to losses.


To succeed in options trading, you must develop strategies matching your risk tolerance and goals. There are many different options trading strategies available, so choosing the ones that fit your individual trading style is essential.


However, how do you foresee the results of an options trading strategy?


Content:

Call Options (CE) Buying Example

Put Options (PE) Selling Example

What is Opstra Options Strategy Builder?

Opstra Options Chain Analysis

Opstra Options Open Interest

Opstra Definedge vs. Sensibull - Which is Better?

Options Trading Course


Opstra Options Analytics Strategy Builder Product Review

Call Options (CE) Buying Example:

Let's assume you are bullish on Reliance stock and aim to make some profits using options.

Image 1 - Reliance Daily Chart
Image 1 - Reliance Daily Chart

After looking at the daily chart, a trader turns bullish on the stock and decides to buy a 2600 call option (CE) to make money.


But to become a successful options trader, knowing the probability of success and how much profits (if the plan goes right) in advance is always a good idea.


Image 2 - Reliance Options Strategy Result Prediction
Image 2 - Reliance Options Strategy Result Prediction

The payoff chart from Opstra gives the below useful information:

  • The probability of success is only 13.82%

  • The maximum loss is Rs.3,675

  • The maximum profit is unlimited (it depends on where the price closes on the expiry day)

  • The breakeven point occurs at 2615

Do you think this information helps to plan your options trades?


Put Options (PE) Selling Example:

Let's assume a trader is bullish on Titan stock and aims to make some profits using options.

Image 3 - Titan Daily Chart
Image 3 - Titan Daily Chart

A gap was sustained for 4 trading days in the daily chart of Titan. Hence, as per breakaway gap theory, it is bullish.


Therefore, a trader is bullish on the stock and decides to sell a 2100 put option (PE) to make money (PE selling is also a long trade in options).


Again it is a good idea to know the probability of success and how much profits (if the plan goes right) in advance.


Image 4 - Titan Options Strategy Result Prediction
Image 4 - Titan Options Strategy Result Prediction

The payoff chart from Opstra gives the below useful information:

  • The probability of success is 68.24%

  • The maximum loss is unlimited (due to the naked selling of PE)

  • The maximum profit is Rs.14,194

  • The breakeven point occurs at 2063

It's quite certain that this information helps to plan your options trades.


What is Opstra Options Strategy Builder?

Opstra Options Strategy Builder or Opstra Options Analytics is a simple tool consisting of several tools that help to find, analyze and track options trading opportunities.