April 2019 — We Buy Options — Day 15

Welcome back to Monday.

The truncated week with 3 trading days is over. Market moved higher over the week though we saw a negative close on Thursday.

NIFTY was at 11752.80 after having touched the all time high of 11856.15 on the same day.

We saw one of our trades doing well on Thursday and that one trade brought down the losses considerably.

Life of an option buyer is full of difficulties. This time we have the problem of having trouble with a good trade.

RELCAPITAL has come in F&O ban. This ban will take away the liquidity. Second problem is of compulsory physical settlement. This is one aspect of option trading which has been messed up by the brokers. They are asking for margins from the PUT buyers also.

We had lot of discussion on the subject over last two days. The readers who missed the conversations can read it here:

https://optionsnext.com/blog/relcapital-put-170-fo-ban-and-physical-settlement-what-to-do/

Please go through the comments section also.

For similar situations in future, keep a copy of this article with you.

https://zerodha.com/z-connect/tradezerodha/policy-on-settlement-of-compulsory-delivery-derivative-contracts

Till the matter is resolved by the authorities ( it will have to be done at some time as all the stocks will come under physical settlement ) , we have to face this situation in which we can not take advantage of our right trade. How unfair the life can be?

Well, today we get out of this trade at an appropriate price.

And we can not move to a lower strike because of the F&O ban.

This is the position as of close on Thursday, April 18:

New Trades for the day :

We do not give up because of difficulties.

We have seen in the past that lot of good things can happen in 4 days. ( Things can go bad too )

So we keep in doing what we have to do.

We missed a trade in EICHERMOT in the early part of this month and it was a good trade to miss as it went wrong.

Once again, this stock is giving hints to buy a PUT. It is weak over 30 days as well as over 7 days. Volatility is decent and a 3-5% decline from the current price of Rs. 21000 can be expected.

EICHERMOT PUT 20500 @ Rs. 100-120 can work out to be a good trade.

Lot Size — 25 Maximum Risk — Rs. 3000.

Keep a watch on BIOCON and BHARATFORG too.

These 4 days before expiry are going to be exciting but whether they will bring in any profit is to be decided by the market.

Trade cautiously, trade profitably.

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.

Comments

vishal agarwal April 22, 2019 at 9:17 am

29.9 sold it.

admin April 22, 2019 at 10:55 am

Congratulations. A good trade.
Reply

bhogendranath Nallan Chakravarthula April 22, 2019 at 10:01 am

exited relcap in first 15 mins

Tharik April 22, 2019 at 10:50 am

Exited from Relcapital 170 PE @35. Not in a mood to get out of the trade, but still got out due to the physical settlement and margin requirement.

Luckily I took only two trades for this month and Relcapital is one among them.

Thanks Pramod Sir for your guidance

admin April 22, 2019 at 10:54 am

Congratulations Tharik, on a very good trade.

Hoping for more such trades for you.

Cheers.
Reply
- Tharik April 22, 2019 at 11:03 am
  
  Thanks a lot Sir. Will be very patient going forward on taking any new trades as per your earlier advice.
  Reply
vishal agarwal April 22, 2019 at 11:09 am

Looks like most of the sellers of RelCapital today are followers of this blog. Else who has the patience to hold ITM option for this long. In my view this is one of the most important learning to hold a good trade patiently to extract max value.
Sir any number of thank you is not enough to thank you for such wonderful trading experience. Profit booked on this trade is my biggest gain ever on a single trade with just 1 lot.
Reply
- Tharik April 22, 2019 at 12:58 pm
  
  Hi Vishal,
  It looks like you are new to this blog as well. We had quite a good number of trades that had more than 30k profit in the past. And three or four times, we have seen profits in 6 digits in just one lot.
  It’s not possible for us to expect for such gains everytime. We keep looking for trades that gives us 30 – 40k profits and leave the rest to markets. Always keep the risk manageable and we are surely going to see success with experience.
  
  All the best for your trading career.
  Reply
  - admin April 22, 2019 at 2:17 pm
    
    Dear Tharik,
    
    Vishal is a regular reader and posts a number of comments here. Taking the trades and waiting in profit comes through experience.
    
    Anyway, Vishal generally shares his views generously so I leave it to him to reply to your comments.
    
    Cheers.
    Reply
  - vishal agarwal April 22, 2019 at 2:39 pm
    
    Hi Tharik,
    I started following the blog Nov 2018 onwards. Since then I am following my own learning curve with regards to trading options based on methods suggested by Sir. I missed a couple of opportunities initially like Sunpharma, Zeel etc. Initially, I had to overcome my hesitation to take a trade; Second was to overcome the fear of reversal and losing out on a good trade by booking early (happened in January); Now am trying to learn money management because I tend to take some random positions based on my intuition etc. and end up having way too much exposure (This led to losing the January profits in February in spite of a couple of good trades booked in Tata motors (taken on my own) when it fell 30% post quarterly results, ) I am still learning a lot from our dear mentor Pramod Sir. Hopefully, I will be able to witness the best of profits in the coming months/years and try to inspire/guide others as well who are currently making losses in trading.
    Thanks for your wishes and I wish you the same. I could make out from the old posts that you are amongst the initial followers of the blog.
    Reply

Saket April 22, 2019 at 10:55 am

I had sold 150PE leg of RELCAPITAL to protect the profit of 170PE. Squared-off both the legs today (out of fear of getting auto-squared-off by broker!) with a profit of around 26K. Though not the best trade, I am happy to have come out in decent profit.

Ravi Kumar April 22, 2019 at 10:56 am

Had exited RelianceCap last week @ 22 and entered 140 PE @ 4.5. Today exited @ 10 with all the Ban & Margin compulsions

Thaks Pramod sir!

Ravi Kumar April 22, 2019 at 11:00 am

I had taken Eitcher trade (19500 PE) 2 weeks back ,but it went into loss due to side ways movement. Good for those who didnt take the trade.

Today exited it , helped by a bit of recovery in PE value. Took 20500 PE freshly. Fingers crossed

MR April 22, 2019 at 3:02 pm

Crude should be going up.. hpcl going down. May be 230p may series. Anybody got ?

Anand Kumar April 22, 2019 at 4:26 pm

We closed Relcap on Thursday at ₹25 due to margin limitations and also fear that three days gap can bring change in trend.

But we applied what we learnt here, move to next strike while taking profit. We moved to 140pe at ₹5.4 and closed that too today since I got email from zerodha at ₹8.5.

Good trade after many weeks of RED portfolio. Thanks to Pramod Sir and market.

vishal agarwal April 22, 2019 at 6:08 pm

Certainly, this cocktail of FnO ban and physical settlement led us to take some forced decisions. Otherwise, this trade was a classic Pramod Sir trademark trend following trade where you just need to sit tight and ride the momentum till expiry.
Reply
- Anand Kumar April 22, 2019 at 10:26 pm
  
  True, with this ban, now even option buyers are forced to have substantial margin 🙁
  Reply

Vishal Agarwal April 22, 2019 at 8:49 pm

Looks like Zeel will go up tommorow on back of this news
https://m.economictimes.com/markets/stocks/news/blackstone-buys-essel-propack-for-up-to-460-million-to-launch-open-offer-at-rs-139/share/articleshow/68990976.cms

admin April 22, 2019 at 9:11 pm

It is a group company. That should not impact ZEEL trade.
Reply

Barda April 23, 2019 at 12:32 am

Hello All, Interesting to read all the comments.

vishal agarwal April 22, 2019 at 9:17 am

29.9 sold it.
- admin April 22, 2019 at 10:55 am
  
  Congratulations. A good trade.
bhogendranath Nallan Chakravarthula April 22, 2019 at 10:01 am

exited relcap in first 15 mins
Tharik April 22, 2019 at 10:50 am

Exited from Relcapital 170 PE @35. Not in a mood to get out of the trade, but still got out due to the physical settlement and margin requirement.

Luckily I took only two trades for this month and Relcapital is one among them.

Thanks Pramod Sir for your guidance
- admin April 22, 2019 at 10:54 am
  
  Congratulations Tharik, on a very good trade.
  
  Hoping for more such trades for you.
  
  Cheers.
  - Tharik April 22, 2019 at 11:03 am
    
    Thanks a lot Sir. Will be very patient going forward on taking any new trades as per your earlier advice.
- vishal agarwal April 22, 2019 at 11:09 am
  
  Looks like most of the sellers of RelCapital today are followers of this blog. Else who has the patience to hold ITM option for this long. In my view this is one of the most important learning to hold a good trade patiently to extract max value.
  Sir any number of thank you is not enough to thank you for such wonderful trading experience. Profit booked on this trade is my biggest gain ever on a single trade with just 1 lot.
  - Tharik April 22, 2019 at 12:58 pm
    
    Hi Vishal,
    It looks like you are new to this blog as well. We had quite a good number of trades that had more than 30k profit in the past. And three or four times, we have seen profits in 6 digits in just one lot.
    It’s not possible for us to expect for such gains everytime. We keep looking for trades that gives us 30 – 40k profits and leave the rest to markets. Always keep the risk manageable and we are surely going to see success with experience.
    
    All the best for your trading career.
    - admin April 22, 2019 at 2:17 pm
      
      Dear Tharik,
      
      Vishal is a regular reader and posts a number of comments here. Taking the trades and waiting in profit comes through experience.
      
      Anyway, Vishal generally shares his views generously so I leave it to him to reply to your comments.
      
      Cheers.
    - vishal agarwal April 22, 2019 at 2:39 pm
      
      Hi Tharik,
      I started following the blog Nov 2018 onwards. Since then I am following my own learning curve with regards to trading options based on methods suggested by Sir. I missed a couple of opportunities initially like Sunpharma, Zeel etc. Initially, I had to overcome my hesitation to take a trade; Second was to overcome the fear of reversal and losing out on a good trade by booking early (happened in January); Now am trying to learn money management because I tend to take some random positions based on my intuition etc. and end up having way too much exposure (This led to losing the January profits in February in spite of a couple of good trades booked in Tata motors (taken on my own) when it fell 30% post quarterly results, ) I am still learning a lot from our dear mentor Pramod Sir. Hopefully, I will be able to witness the best of profits in the coming months/years and try to inspire/guide others as well who are currently making losses in trading.
      Thanks for your wishes and I wish you the same. I could make out from the old posts that you are amongst the initial followers of the blog.
Saket April 22, 2019 at 10:55 am

I had sold 150PE leg of RELCAPITAL to protect the profit of 170PE. Squared-off both the legs today (out of fear of getting auto-squared-off by broker!) with a profit of around 26K. Though not the best trade, I am happy to have come out in decent profit.
Ravi Kumar April 22, 2019 at 10:56 am

Had exited RelianceCap last week @ 22 and entered 140 PE @ 4.5. Today exited @ 10 with all the Ban & Margin compulsions

Thaks Pramod sir!
Ravi Kumar April 22, 2019 at 11:00 am

I had taken Eitcher trade (19500 PE) 2 weeks back ,but it went into loss due to side ways movement. Good for those who didnt take the trade.

Today exited it , helped by a bit of recovery in PE value. Took 20500 PE freshly. Fingers crossed
MR April 22, 2019 at 3:02 pm

Crude should be going up.. hpcl going down. May be 230p may series. Anybody got ?
Anand Kumar April 22, 2019 at 4:26 pm

We closed Relcap on Thursday at ₹25 due to margin limitations and also fear that three days gap can bring change in trend.

But we applied what we learnt here, move to next strike while taking profit. We moved to 140pe at ₹5.4 and closed that too today since I got email from zerodha at ₹8.5.

Good trade after many weeks of RED portfolio. Thanks to Pramod Sir and market.
- vishal agarwal April 22, 2019 at 6:08 pm
  
  Certainly, this cocktail of FnO ban and physical settlement led us to take some forced decisions. Otherwise, this trade was a classic Pramod Sir trademark trend following trade where you just need to sit tight and ride the momentum till expiry.
  - Anand Kumar April 22, 2019 at 10:26 pm
    
    True, with this ban, now even option buyers are forced to have substantial margin 🙁
Vishal Agarwal April 22, 2019 at 8:49 pm

Looks like Zeel will go up tommorow on back of this news
https://m.economictimes.com/markets/stocks/news/blackstone-buys-essel-propack-for-up-to-460-million-to-launch-open-offer-at-rs-139/share/articleshow/68990976.cms
- admin April 22, 2019 at 9:11 pm
  
  It is a group company. That should not impact ZEEL trade.
Barda April 23, 2019 at 12:32 am

Hello All, Interesting to read all the comments.

share

April 2019 — We Buy Options — Day 15