This is how BANKNIFTY moved yesterday.
This is just what I mentioned in my yesterday’s post. One day up, another day down kind of moves eat away the option premiums. That is what we are looking for. But if the down move continues, premium on sold PUTS will rise and we lose there. BANKNIFTY PUT 30300 which we bought will mitigate the loss to a considerable extent.
It is a balanced trade and most likely outcome is that we have a reasonable profit or a small loss at expiry.
This is the position at closing prices yesterday:
We stay with the trades.
Do nothing. Let us see how doing nothing works.
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.