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Test option selling before you risk money on it

Option selling wins often and loses big when it loses. That shape is exactly what a backtest is good at showing: the long run of small gains, the few days that take them back, and whether the rule was worth it after charges.

What makes a fair test

  • Real option candles for each strike and minute, not prices worked out from a model
  • The expiry days that applied on each date
  • Stops checked against each minute's high and low
  • Every charge on every order
  • A period long enough to include bad markets, such as March 2020

Questions

Which strategies can I test?

Any mix of bought and sold calls, puts and futures, up to many legs, with exits per leg and for the whole position.

Is option selling profitable?

A backtest replays past prices. It shows how a rule would have done, not how it will do, and trading can lose money.

Related guides

  • Backtest a short straddle the way you would trade it: Backtest a short straddle on NIFTY, BANKNIFTY or SENSEX. Test entry times, per-leg stop losses, move-to-cost and re-entries, with charges included.
  • Backtest an iron condor: Backtest iron condors on NIFTY, BANKNIFTY and SENSEX. Choose wings by distance or premium, add stop losses and adjustments, and see the result after charges.
  • Backtest BANKNIFTY option strategies: Backtest BANKNIFTY option strategies on 1-minute data from 2019, with expiry changes, stop losses, re-entries and full charges per trade.

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