It involves ideating various strategies and extensive back-testing to arrive at the winning strategy.
Back-testing & Data Analysis-
Developing trading strategies by back-testing using historical data and applying the same to various scripts.
Executed various strategies as proprietary dealer, some of which are highlighted below.
i) Volatility Trading-Creating Volatility spreads in Nifty Options to capture mispricing.
ii) Calendar Spreads-Creating spreads across months to benefit from the Time Value depreciation of current/next month options.
iii) Put Call Parity Spreads-Buying the cheaper and selling the dearer option using Put-Call Parity with Delta hedging Ratio Spreads-Creating Bull /Bear Ratio Spreads with appropriate hedging.
iv) Volatility Jobbing-Shorting/Buying Volatility using technical indicators(Foreign markets, Volatility Graphs, Combination of Open Interest-Volume and Price, etc).