Out of 20 days available for trading n February Expiry month, 10 days are now gone. We still do not see a profit for this month.
NIFTY moved lower for yet another day. This evens out the score for the current month. 10 trading days. 5 gaining days in a row followed by 5 losing days strung together. This tussle between bulls and bears is gripping to hear about but is not doing good for our trades.
It was a different kind of negative day. The stocks which were beaten down over last few days rose very sharply today. The fall was due to losses in RELIANCE, INFY and TCS which have significant weight in the index.
This trend of the beaten down stocks moving up caused serious harm to our trades in IDEA, BHEL, ZEEL, HEROMOTOCORP and GRASIM and LT going wrong.
HINDPETRO is another one which raised hopes and then dashed them. A day ago I had written that I wish stock moves below Rs. 220 and then below Rs. 210 very soon. It went below Rs. 220 very fast and then moved below Rs. 214 as well. Just when I started feeling good about the trade, it turned around and recovered to Rs. 222.60. By end of day it was at Rs. 220. Once again, the profit from the trades becomes a distant dream.
M&M made fresh 52 week low in the opening minutes. Then it moved higher like it does every day. Near the close of the day, it made yet another low at Rs. 632.30. I have exited PUT 660 at Rs. 28.00 and moved to PUT 630 at Rs. 10.00. This is one trade in which some profit is booked and we are in the trade if the down trend continues.
The positions as on February 14, 2018 :
Today being the last day of the week, we may see volatile moves towards close. If in our favor, that would be great. Otherwise, we just take the beatings and lick our wounds over the weekend. We can not fight the market.
Outlook for today:
As of 8:25 am, Asia Markets are trading in the red. SGX NIFTY has just moved into negative , down 7.5 points.
This is an indication of weakness. Only concern is that we have already had 5 days of weakness. Let us see which way this daily battle between hope and despair goes.
While watching the moves let us be focused on our trades and not the noise in the market.
Those readers who are still in the M&M trade can make the move to lower strike today.
No new trades for the day.
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
Prince Nahata February 15, 2019 at 8:39 am
Sir should we put a stop loss if we are trading deep ITM in place of OTM ?
Replyarnab February 15, 2019 at 7:07 pm
Why are you keeping on holding stocks even its in uptrend when you have purchased put options? Don’t you feel you should cut your losses and move on?
Replyadmin February 15, 2019 at 7:23 pm
Dear Arnab,
I appreciate your concerns. The point I wish to make is that if I start getting out of every trade that goes wrong for some reason or reversal , I will never make money. I have stated many times that the entire option premium is my stop loss if the trade goes wrong. On many occasions the option came back into the money, most recent being ZEEL PUT 420 in January. From Rs. 5.00 it moved down to Rs. 0.70 and then the crash happened. PUT 420 moved up to Rs. 120. What would I gain by exiting at Rs. 0.70? A single turn around like this ( or even smaller than that ) can take care of 10 -12 wrong trades.
ReplyWhy mend some method which is making money?
Cheers.
Raveendran K A February 16, 2019 at 8:18 am
“the entire option premium is my stop-loss” – that sums up the this trading strategy. Makes sense too in the light of the overall winning performance of this strategy.
Replyvishal agarwal February 15, 2019 at 7:36 pm
Sir could you please share a strategy where we can apply the same method of buying strength to stocks in cash segment in the form of short term investments/trades. Can we apply the same principles of 1 month
Replyand 1-week uptrend to cash stocks trading? Also, for this particular case, we are not restricted to FnO stocks. Specifically how many scrips we should buy – for ex. in options we typically have 10-12 trades in a month. I am looking at something similar to what you started initially with futures trades but since we do not have the liberty of 10-12 lakhs of margin we cannot pursue that strategy. But if we can apply a similar strategy on stocks in the cash segment but with the flexibility of choosing the position size based on the investment funds available.
Thanks, Sir!
arnab February 15, 2019 at 8:15 pm
Great sir, thanks a lot for sharing your insight, however I feel it’s better to cut short, there should be some parameters, still I liked your comment “Why mend some method which is making money?”, very true.
ReplyBhushan February 16, 2019 at 9:28 am
The beauty of the strategy is it’s simplicity. It is not uncommon to have option price swing widely on both sides and calculating and maintaining stop losses can add complexity without much benefits. Also these options are not highly liquid and there is good difference in bid ask prices. As Sir said, no use in fixing something which is not broken.
Reply