The Options Journey — One Year — May 2018 to April 2019 — A Review

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We started the option buying series on this blog from May 2018 Series.

The journey has seen its ups and downs. We have seen few good profits and few bad losses. We had some conventional wisdom working against us and a method and some luck were essential to come out successful.

The points needed to be overcome were:

About 80% of the options expire worthless.

Option Buyers do not make money because time is always against them.

Indeed these are two strong factors which impact option buying and result in losses.

Let us review how did we perform over the 12 month period.

The review till January 2019 ( 9 month period) was already published here:

http://optionsnext.com/blog/the-options-journey-in-numbers-a-review-of-9-months/

Let us look now at last three months which in fact did not go very well.

February 2019 :

The month started with the budget presentation and NIFTY went up initially to come down later. We had a good trade in M&M and HEROMOTOCO but other trades did not do well.

We had 3 trades giving profit and 9 of them went into loss, total loss for the month being Rs. 30371.

March 2019 :

We kept trading in the same manner. Again the market did not oblige much. We were into profit initially, went into a big loss and then recovered some part of it.

The result was again a loss which was lower than the previous month.

12 Trades, 3 Right 9 Wrong, Loss Rs. 25450.

The question many readers asked was whether we should not exit when we see some profit. My answer was that we have to wait for big profits. We have succeeded in the past because of bagging some big gains and that way only will work in this business of option buying. Sometime the small gains seen initially may be frittered away while waiting for a bigger profit. That can not be helped. We are not here for instant gratification. We are in here for a regular deal, month after month. We shall take our hits and misses equally well.

It was time to move on to April.

April 2019 :

Market made new all time highs. We had too many PUTS. It was natural that there will be losses. Five days before expiry we were looking at a loss of Rs. 43000.

In the last 4 days, situation changed in our favor just because of a single trade in RELCAPITAL. If the stock was not in the F&O ban we could have waited out and probably recovered the entire loss. But we had to book the profit early.

We had only 2 trades going right out of a total of 11 and the loss for the month was reduced to Rs. 16887.

This is the third continuous month of losses and it is time that we are back to winning ways.

If we look at the results we find that even though only 8 out of 34 trades have given some profit, the total loss in this 3 month period is Rs. 72510.

The combined loss for three months is significantly lower than the profit of a single month in January 2019 Expiry.

This is the beauty of option buying.

Losses are already known and can be controlled. Profits could be anything and should not be controlled. Most of the traders try to control the profits and end up getting less than what the market wanted to give.

Summary for 12 Months :

Number of Contracts Traded —- 156 ( 12 months )

Number of Wrong Trades ——– 99

Number of Right Trades ———  57

Winning Months —————-    07

Losing Months ——————-   05

PROFIT for 12 month period —- Rs. 649323

The profit is derived from a risk capital of only Rs. 200000 out of which maximum Rs. 100000 was risked at any point of time.

The last three months have been losing months but still the profit is significant.

A profit of 320% in 12 months is wonderful in percentage terms as well as in absolute numbers.

We shall continue with the same method in the coming months too and see where it takes us in the second year of trading.

I know trading with a method is at times dull and boring. We are having only 156 trades in almost 240 days of trading in a year. But as long as its make money, I am happy with the dull and boring. We are in the market for making money and not for thrills and excitement.

I thank the readers who have stayed with me through this journey and hope that more readers shall join the journey for the second year.

Welcome aboard.

12 Comments

  • SENTHILNATHAN

    The journey of the whole year was a testimony of what a disciplined way of trading means to a trader.
    Most of the followers here (including me) might not have taken all the trades in the same quantity consistently.
    Now the faith in the system is more influential as supported by the first year’s report.
    Confident that the second year will prove to be more rewarding to all the disciplined traders.
    Let the journey continues.

  • JERRY

    Well, for me the overall journey of 8 months (I joined in September) has been extremely fruitful though the last few months haven’t gone our way. One of the most important things I learnt here was to make it count big when your trade is right. It is extremely difficult at times but with time and experience I hope to overcome my fear and get better.
    Thank you Sir and all the very best to you and all of us following this blog in the second year.

  • Sajeev

    It will be interesting to watch this strategy since last year was a negative year for the Nifty and buying Puts was a huge winner. However if the market is bullish then either using some trend filter and buying only calls or having an equal number of calls and puts might work better.

    Also it might be better (at least I am) to stay out in the month of May since options are going to be very expensive factoring in election volatility and in the end the market will be driven not on data in the month but sentiment.

    Just my two bits ….

    Wishing you a profitable year.

    • admin

      Dear Sajeev,

      We always try to convince ourselves as to what should work in the market. As long as one is afraid of loss and risk, there would be no reward.

      Nifty was at 10617.80 on April Expiry in 2018 and 11641.80. A gain of more than 1000 points.

      How do you say that Nifty is down over one year?

      • Farhaan

        The broader market in general was down. We are at the cusp of an uptrend. Last year only nifty went up and broader mkt down. Now broader mkt will pick up maybe this month or after elections.

        • admin

          This is the type of language used by TV experts.

          I stick my neck out and either lose money or make money. Making generalized statements does not help us in anyway.

          Cheers

  • Kush

    Sir its really a great experience looking at the journey of an option buyer since last one year.

    Have some questions for u, will be glad if I get the answer.

    Sir, u started this option buying with your strategy since last year only or u were doing it earlier also, as u have a long career in stock market by now.?

    Are you planning to enter index options and have u tried working in it earlier.?

    Sir what if one gets a big loosing streak of months in option buying with your strategy, how the person will survive in such a condition.? As we have seen u got some good PROFITS in initial months itself..

  • Santosh Kumar

    Dear sir,
    Santosh Kumar here , I were attended Ur last meet up training program conducted in March 2019 at Andheri East, Mumbai..

    So I here by request you kindly… please arrange for future program / training program for Mumbai …

    Please let’s know about

    Thanks

    Regards

    Santosh Kumar

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