Summary
Highlights
It is crucial to apply the Adjustment Theory after 2:50 PM. Before this time, the market has ample opportunity to shift, making the strategy less effective. Patience is highlighted as a key factor for success, as waiting for the optimal price difference is essential for high-risk-reward trades.
The video starts with an introduction to the Adjustment Theory, explaining that it aims to clarify how to execute, plan, and time trades effectively. The session focuses on dispelling doubts about the theory's application.
The first step is to add the index nearing expiry, such as Nifty 50. Then, identify the current strike price (e.g., 22550) and add both the Call and Put options for that strike. If the market is likely to shift to a different strike, the less relevant strike's options are removed.
The video emphasizes checking the prices of the Call and Put options. Ideally, for a strike price where the market is currently trading, the Call and Put values should be similar. The goal is to wait for one side (Call or Put) to drop significantly in price while the other increases, creating an opportunity to buy the undervalued option.
The video demonstrates waiting for the Call option to drop to 1-1.5 rupees while the Put remains around 6-7 rupees. Once the Call reaches the desired low price (e.g., 1.35 rupees), an entry is made. The speaker then highlights the potential for significant returns, showing a hypothetical increase from 1 rupee to 4 rupees, emphasizing the profitability with patience and adherence to the process.