Sample Strategy- Entry by Premium (NIFTY)

Disclaimer:

This document is for informational purposes only and describes the mechanics of the strategy as configured on the Quantiply platform. It is not financial advice. Past performance of any strategy does not guarantee future results. Please ensure you understand the risks involved before trading with real capital.

What is Entry by Premium?

When you set up a strategy, one of the first decisions is which option strike to trade. The most common way is to pick a strike by its distance from the current price — for example, ATM or OTM 5 (5 strikes away from ATM). Entry by Premium gives you a different, and often more precise, way to do this: you choose a strike based on its current premium value instead.

You define a target premium, say Rs. 50 or Rs. 200, and the system automatically scans the entire option chain to find the strike whose current premium is closest to that value. Instead of thinking in terms of strikes and distances, you think in terms of rupee value.

Why does this matter? Because the same OTM 5 strike can have very different premiums on different days, depending on volatility, time to expiry, and market sentiment. Entry by Premium gives you more consistency in the rupee risk you are taking, regardless of what the market is doing.

Strategy Snapshot:

Overview of the key configuration parameters for this strategy

Settings:

Setting - Premium Value Mode

This defines how the system interprets the premium value you have entered. There are three options:

• Premium Close To: The system picks the strike whose current premium is closest to your specified value, whether slightly above or slightly below. This is the most flexible mode and works well in most situations.
• Premium Higher Than: The system picks the strike with a premium that is higher than your specified value but as close to it as possible. Use this when you want to ensure the minimum premium collected or paid is at least a certain amount.
• Premium Lower Than: The system picks the strike with a premium that is lower than your specified value but as close to it as possible. Use carefully; if no strike has a premium below your specified value, the system will not be able to enter.

A practical Example:

Suppose you want to sell a NIFTY Put option with a premium close to Rs. 80. Here is how the system handles it:

• At entry time, all available NIFTY Put strikes are scanned.
• The system checks the current premium of each qualifying strike.
• Suppose 12,800 PE has a premium of Rs. 78 and 12,900 PE has a premium of Rs. 85. With Premium Close To Rs. 80, the system picks 12,800 PE as it is closer to Rs. 80.
• The sell order is placed at the selected strike in this case, 12,800 PE.

Important Notes and Recommendations:

• Avoid using Premium Lower Than when targeting very low premium values. There may be no strike in the chain with a premium that low, and the system will not be able to enter.
• Use Premium Close To or Premium Higher Than instead. These ensure the system always finds the best available match and does not miss the entry.
• The system will never partially enter some legs. It waits until all legs have a fresh price update before placing the orders in all configured legs together.