TripleInt's Option Trading System is based on solid research into the studying of option prices, volatility, open interest pertaining to the Indian derivatives markets.
The implied volatility skew and the open interest skew are compared over discrete sets of strike prices and a band is arrived at with the current spot price as the center. This gives an overall indication on the current bias either towards call or put, based on actual facts, based on the actual price, volatility, open interest data.
The above details give the direction of market under majority of the situations. When the skew is favoring calls to a great extent, it indicates that a bullish move is expected to follow. When the skew is favoring puts to a great extent, it indicates that a bearish move is expected to follow. When the skew is neutral, it indicates range bound markets or non-trending markets. The larger is the %skew, the greater is the chance of markets to move in that direction.
This data is taken into consideration, along with TripleInt's proprietary technical indicators which account for the volume traded and correspondingly attribute it towards the market direction. The trading system is used for NIFTY and BANKNIFTY options only.
System trade has the advantage of risking only a small portion of the capital on each trade based on the user's risk profile configuration. Also there is continuous monitoring for any intraday sharp moves along with a trailing stop exit if the position does not move favourably. Position sizing (the number of lots to trade) is done based on the risk profile configuration selected by the user.
Money management is again an integral part of the system. While risk management takes care of the risk per trade based on the user's configuration, money management takes care of the overall risk of the system during a large drawdown phase or during continuous losing streaks.
In any kind of system, we can never be 100% sure of whether the current trade or the trades for the week or month is going to make profit, but by continuously executing the system trade one after the other with positive expectancy there is a chance. However nothing can be guaranteed.
The expectancy of the system is based on back testing it over a multi year period and studying how the system behaves in various market conditions. System is back tested from 2016 May till date and has seen multiple market scenarios like low volatility, high volatility, bearish phase, strong bull run etc., System is tuned to adapt to various market conditions and also on when the system can be run and when it should be stopped as well as when the other positional weekly hedged system should be run or a combination of both.