Yesterday was a perfect case in favor of trading with a strategy.

RBI Monetary Policy announcement was scheduled at 11:00 am. Market was okay before that. This is what happened after the 25 bps cut was announced.

All the three major constituents of BANKNIFTY i.e. the stocks in which we have sold PUTS lost. All the PUTS are now In The Money. Any further down move can cause a bigger loss.

But our bought PUTS are also in the money. If these stocks continue to fall, BANKNIFTY will also fall and our PUTS will be gaining. That is the protection we have with a strategy.

The position at close on April 04:

We still do nothing. Stay with the strategy. Stocks will either move up or move down. The day will surely come to an end. Finally it is the time premium which are likely to get as profit.

Doing nothing is a good thing.

Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.