What a month this has been.
State Assembly Election Results not favoring the ruling party, RBI Governor resigning and quickly being replaced, world markets tanking to the lowest point of the year while our market tried valiantly to buck the trend initially and then give up.
This has been a month where the twists in the tale do not come to an end.
On Christmas Eve, US Markets sunk to the lowest point of the year. On December 26 we thought we shall also go down. How long we can stay aloof from the biggest market in the world. I had written here yesterday that we may see NIFTY going below 10600.
We saw it going to 10534.55 and then move to a high of 10747.50 ( an up move of 213 points during the trading hours) before closing at 10729.85. So much for the connect with the US Markets.
The twist does not end here.
This is what Dow Jones did on December 26, 2018 the day after Christmas.
When did we last see an Index gaining 5% in a day ? NASDAQ did better than this by being up by 5.8%.
Is it the return of good times the world over or just recovering what was lost in 2-3 days before Christmas ? We do not know. Looking at the Asian Markets this morning in early trades it does not appear that too much is being made out of this move in the USA.
Our Position :
Apart from a general idea about the likely trend, we have seen that the international cues just do not work for us. Trades have a mind of their own and this month our trades have decided to go wrong collectively.
Yesterday a little hope was kindled as the market went down initially and then the reversal happened. That reversal combined with the trend from US markets overnight does not gove us any hope for today, the last day for December Expiry trades.
It is time to salvage whatever can be salvaged and write off this month as a losing month.
Yesterday JSWSTEEL trade was not taken as initial price for PUT 280 was higher than our price range and when it entered our price range, the trend had already reversed and it did not make sense to add to a losing position when the trend is against us.
Every other trade lost further ground. Today we shall look towards taking whatever little can be taken from these trades and move on to next month.
A loss creates some bitterness and loss of confidence. It is normal and we just have to get over it. Remember what every one tells us — Option Buyers do not make money. Sometimes these people are right. We made money in 6 out of 8 months and good money at that. Every month is a new opportunity and we look forward to January trades.
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.
Rohit KUMAR MISHRA December 27, 2018 at 8:40 am
Sir, I follow your blogs daily. I am newcomer in trading arena , but your teaching and motivation always encourage me to stay intact despite losses. Wish you best of luck Sir for upcoming months.Reply
Ravi kumar December 27, 2018 at 9:31 am
Unseen volatility in US markets (5% gain) and even yesterday our markets ended positive. Had some 25k profit at one point through puts in BNKNifty and NIFTY but got vaporized in no time 🙁
Our markets seem to gain when US falls. And raises even more higher when US raises!! ..Reply
May be this is the start of the bear trap for us!!!
Tharik December 27, 2018 at 9:54 am
Dear Pramod Sir,
Its not the confidence we lost in this method, but its the capital invested. In such a volatile times as now, no trades will seem to work. Can we book our profits (in case of profitable trades) early and move on to next strike prices in the next series? By that way we wont be exposing too much of money in the risk zone. Please provide your valuable suggestions Sir.Reply
admin December 27, 2018 at 10:00 am
There is a satisfaction in booking small profits. But then we can not have a month like September 2018. Getting trades of the next series is not easy as options are thinly traded. We shall see how to go about in next month. Trading methods are always evolving. Losses are something we have to accept and live with. Without them we will not learn how to trade rightly.Reply
Tharik December 27, 2018 at 10:11 am
Thank you for the response Sir.Reply
I didn’t mean to move to next strike of next series. I was just asking if we could use the method of quick profit booking and moving to next strike price from next series onwards. Because I don’t have a capital to hold 7 or 8 trades in one series, but I can take 3 to 4 positions.
Akshay Kumar December 27, 2018 at 11:00 am
Do you mean, we should square off our positions right now or shall we end till the end of the day. Please confirm.
admin December 27, 2018 at 11:05 am
If it is near the strike price there is some point in waiting in the hope of a reversal however unlikely. From other trades, a quick exit should have already been taken. Anyway it does not matter. we shall be salvaging a very small amount of money.
divyank December 27, 2018 at 9:56 pm
Sir, have you tracked that what could have been the status of our trades if all was traded in futures, not options in all these months. I realize that in reality futures are wealth creators with risk and reward ratio as done when you started the blog. 🙂Reply
admin December 28, 2018 at 6:36 am
I have not yet worked out but apparently futures would have been profitable. The main issue is the capital requirement which is bigger in futures trades and the loss can be huge if the trades go wrong.
The aim is not to lose big and options are the right tool for that goal.