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Hey Option Writers,
Lately, I’ve been hearing a lot about traders—especially in Gujarat/Rajasthan(in India)—using manual Delta Hedging strategies in options trading. The approach seems to involve:
\- Shorting Call and Put options with the same delta (e.g., 0.25 delta call and 0.25 delta put).
\- Alternatively, selling calls and puts with the same premium and adjusting the position when the total premium received deviates by a set percentage (e.g., 30%).
\- Squaring off the winning/losing leg and re-entering a new position (call or put) to match the existing position’s premium or delta.
Questions:
1. Feasibility for Retail Traders: Is this even practical for a retail trader? Opening and closing so many trades manually seems tedious, and brokerage costs could eat into profits. How do people manage this?
2. Risk vs. Reward: I get that this is a "picking up nickels in front of a steamroller" strategy. What are the real pros and cons?
3. ROI: Do people actually make a consistent 1-2% ROI per month with this? Or is it more of a theoretical edge that’s hard to execute in practice?
4. Execution: Are there tools/algorithms to automate this, or is it all manual?
I’m curious if anyone here has experience with this or knows someone who does. Would love to hear your thoughts, experiences, or even warnings!
Thanks in advance.