What do you do on such a day?:

At 1:30 pm, market grew wings and took flight. Before one could understand what was happening, it was not worth understanding. The damage was done.

We were into lot of PUT trades. Naturally nothing much was expected from the trades already gone wrong. But the few which showed some hope in the morning ( INDIGO PUT 1440 came good at one point as the stock went below that level ), were down and out by the time NIFTY closed 150 points higher.

Just two days ago, we saw a 158 point down move.

Wednesday was just the reverse of it.

Our loss went up to little above Rs. 16000 with such a huge move against us.

This is going to be straight third month of losses.     Such a streak is not good for the trading morale and we are seeing it for the first time in last one year.

Some readers immediately come up with a quick fix solution— We knew the trend. we should have bought CALLS instead of so many PUTS.

PUTS and CALLS do not matter. Market can move in such a manner that one loses money whether you bought PUTS or CALLS.

This is what happened to our reader Mr. YOGI’s trades who had bought 6 CALLS.

We too are not covered in glory. Only 1 trade has gone right so far and the loss is near Rs. 16000.

Life of an option buyer is full of such situations. Damned if you do this and damned again if you do that. The focus should be on keeping the losses as low as possible. One month of good profits will take care of few losses.

What to do on Expiry Day ?:

Trend has gone massively against our trades and it is a foregone conclusion that we are losing this month.

Still I would watch for any initial down move in BHARATFORG, INDIGO and EICHERMOT and try to salvage something if possible. Otherwise, we just let it go.

Let us see how the day pans out.

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.