July 2018— Options Once Again — Day 09

Up, up and away.

That is how the markets were yesterday. A gain of 94 points over a gain of 80 points on Monday. This makes it 174 points in two days.

Not a good news for our PUT trades and we have 8 of those.

On June Expiry day, NIFTY had closed at 10589. It has moved up by over 350 points in just 8 trading days.

Already experts have started singing about the new highs. They may be right.

But last time NIFTY was about 11100, BHARTIAIRTEL was above Rs. 500 and TATAMOTORS was around Rs. 450. I do not think with NIFTY gaining another 150 points, these two are going to be anywhere near those levels.

New highs or consolidation, what matters for us is our trades which unfortunately have gone wrong this time.

They had gone wrong similarly last month too. In the last week before expiry in June, they started becoming right and ended up profitable.

Option Buyers worst outcome— You can lose the entire premium. If that happens, we have next month’s trades. Nobody ever said that one has to make money every month or in every trade.

It is not to sound pessimistic, but to add a dosage of reality to the narrative.

Markets Next Move :

I am reproducing some of the points made at Moneycontrol website about the current and Future NIFTY moves.

After a rangebound trade for around two months, the strong breakout indicated that the Nifty could be heading towards its earlier all-time highs of 11,171 touched on January 29, experts said.

According to Pivot charts, the key support level is placed at 10,896.97, followed by 10,846.73. If the index starts moving upwards, key resistance levels to watch out are 10,977.17 and 11,007.13.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan said the index also managed to surpass 78.6 percent retracement of the fall from 11,171 to 9,951 on closing basis. “The key Fibonacci level was placed at 10,910. Thus the bulls seem to be pushing the index for higher levels.”

He said the daily upper Bollinger Band that had become flat over last several sessions has now started expansion along with the price action. “Hence the index now looks set to test its weekly upper Bollinger Band, which is close to 11,100. On the other hand, the level of 10,800 shall act as a crucial support.”

Well, the Fibonacci Levels, Bollinger Band and Pivot Charts all are telling that NIFTY is headed towards the previous high of 11171.

We shall find out soon.

Participation by the readers :

Recently the number and the quality of the Comments has improved significantly. More readers are expressing themselves and interacting through these comments. Please keep doing that. Talking about trades helps us in becoming better trades as mostly we do not find people for sharing our trades.

Our Trades :

We actually do not need a chart to tell us that we are in a bad shape.

Till July 09, we had a loss of Rs. 22528 on a total trade value of Rs. 75135 + 9600 = Rs. 84735. ( Rs. 9600 for UPL PUT 600 ).

On July 10, this loss further increased significantly, the big losers for us being UPL and BHARTI.

Again, I am taking no further trades for the day and just be watchful for the day.

One reader has suggested why I do not buy some CALLS. I can surely do that but first I have to get my conviction about the trade. Let us watch how the day goes by. There are still 11 days of trade left in this month and a lot can happen in this time as we found out last month.

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

Sunil Verma July 11, 2018 at 9:19 am

Dear Sir, As u have said time and again in your posts in Quora and this platform “We should cut our losses and run our profits”. My question is “Is there any limit to which extent we should carry our losses and to what extent we should run our profits”. We have seen in this series itself some large profits have gone into losses. Forgive me for my bad english. Thanks

Sunil Kumar Verma July 11, 2018 at 9:32 am

Dear Sir, As u have said in your various posts that we should cut our losses short and run our profits. Please mention to what extent we should carry our loss making positions and when to book profits in options. Thanks

admin July 11, 2018 at 4:20 pm

Dear Sunil,

I generally take this position that the premium I pay is my stop loss. On the other hand I try to take the maximum returns from the trades that go right. To safeguard against likely reversals we have to move to next higher or lower strike depending on whether it was a CALL or PUT.

Cheers.
Reply

Sandeep Kharat July 11, 2018 at 10:00 am

Nifty will be range bound or Doji (<+/- 0.5%) today as I said yesterday.No chances of upside movement. There can be small red candle . Nifty will be levels of 10900 / 10860 to 10965.
Should not think of long(call buying) from Risk:Reward point of view. For going long will be highest risk of loosing all investment.
Down side movement will begin from Friday or Monday.
Individual scripts will be choppy.
(Comments appear very late , can they be seen quickly?)

Sandeep Kharat July 11, 2018 at 10:05 am

No tension for PUT holders except some price decay . You can expect good move from Friday/Monday.

vijaya July 11, 2018 at 10:54 am

Sir, hats off to you. Your lessons are more valuable than the profits.
Your approach to the trades your conviction to stay with them and why, the periodical reminder that all trades could go wrong, are all lessons one should learn to develop right attitude towards trading. You take us along the journey of trading showing us continuously that it is not a rosy path but a path to tread with caution and conviction. I feel very blessed to have known you and for haven taken the opportunity to learn from you.
Thank you Sir.

admin July 11, 2018 at 4:17 pm

Thanks for the kind words.

We just have to keep doing our job. Market will do its own work. When both are in synchronization, results will be excellent. Otherwise we take the loss.

In January Expiry ( 4 days after our F&O Workshop at Bangalore ), I had a total of 7 trades. Out of 7, 6 had gone wrong. Only one was profitable. It was PUT 480 in BHARTIAIRTEL. Profit from that one trade had taken care of the 6 losses.

Again, my job was only to wait. Profit was delivered by the market.

We have to learn this lesson.

Cheers.
Reply

Prince Nahata July 11, 2018 at 11:43 am

All our eight stocks are moving down nicely even though nifty is flat.

Reshmi P R July 11, 2018 at 1:15 pm

Sir I am holding vedi put 220pe at rs 6.3. now at profit of 4k. Should I hold it or sell it. Is more downside possible

admin July 11, 2018 at 3:42 pm

When a stock makes new 52 week low, it is generally worthwhile to wait. PUT 220 traded at above Rs. 10.00 also. The stock is weak. We do not know how weak. But there is a possibility of some more downside.
Cheers.
Reply

Venkat July 11, 2018 at 2:06 pm

Good moves in all our PUTS… Thank you very much sir… and Thanking Market for having such move in our favour… Hoping to have good ending..

admin July 11, 2018 at 3:42 pm

let us be thankful to the market.
Cheers.
Reply

Nathan July 11, 2018 at 3:56 pm

Pramod ji,
Today’s market movement favoured us, PUT holders, nicely.
Once again the fact that there is no correlation between index and our holdings is emphatically proved.
Again, as you used to quote, “It could be either way; we are here to accept the supremacy of the market and accept whatever the market give”
The above opinion, out of your vast experience, is being realised by many traders at practical level.
As Vijaya posted, ” Your lessons are more valuable than the profits ! ”
Thanks for your confidence giving guidance and thanks to the market.

admin July 11, 2018 at 4:11 pm

Thanks for sharing your views.

Only problem is that — Markets can remain irrational than you can remain solvent. Specially in case of Option Buying. Once in a while the market will oblige us within our time frame. At other times we have to be ready to take a beating.

UPL did very well today after having gone wrong yesterday.

I am happy to see the participation by the readers. It proves that my efforts are bearing some result. At least few people have changed their mind about the Options Trades.
Cheers.
Reply

Sandeep July 11, 2018 at 4:27 pm

Hello Sir… Sandeep here….
Thank you for the fantastic calls… They have performed very well today… Even though Nifty didn’t show much weakness… No I understand the fruitfulness of picking the weak stocks….
Do you see anymore downside in the UPL?

Devendra Bagul July 11, 2018 at 7:51 pm

Dear sir,
Finally for the first time in July series, market gave us reason to smile a bit today !
Hope this to be the beginning for happy ending for us.
UPL performed brilliantly for us!
I booked Profit at Rs 18 for Put 600 and entered Put 580 at Rs 9.30 although I could have got that at around Rs 8.50.
Is it right sir or have I made hurry?
Also bought TCS call and booked small profit….as fear prevailed over patience!
Now let us see how Puts of ICICI Bank, Hindalco, SBI perform in the coming days.
Thanks for your valuable advice and simplicity in explaining complicated subject like Options and selection of stocks and trades with really down to earth attitude & approach is really exceptional..
Once again thanks for everything!
With regards,
Devendra

admin July 11, 2018 at 10:24 pm

What difference does a day make?
Two days of market up move ( 174 points ) countered by just a flat day ( 1 point up ). Totally unexpected but welcome. Rest of the Asia was down but our market was kept up by TCS and Reliance and IT sector.
It is a relief to be temporarily out of serious trouble. We are still in negative territory but get some breathing space.
Simplicity works.
It has worked over 4 months previously and hopefully it will work out this time as well.
Thanks for sharing your thoughts.
Reply

Rohit Shourya July 11, 2018 at 7:57 pm

Hi Pramod sir,
I have often taken the trades that you suggest in this forum. Sometimes which a small change. Like in this series when you had suggest TATAMOTORS 250 PE, that very day the stock had moved up well, so instead of taking the 250 PE I took the 260 PE almost at the price you suggested for the 250 PE.

Same thing I had done for Vedanta in the June series. When you had suggested the 230 PE for a certain price, that very day the stock had moved up well and I was able to take the 240 PE instead at the prices suggested by you for the 230 PE. VEDL gave me good profits in June.

Thanks for all the great discussion here.

admin July 11, 2018 at 10:20 pm

There is no happiness like a trade making good profit. But we have to repeat the success many times over. I am happy that discussions here are useful. That is the whole point of writing.

Cheers.
Reply

Sunil Verma July 11, 2018 at 9:19 am

Dear Sir, As u have said time and again in your posts in Quora and this platform “We should cut our losses and run our profits”. My question is “Is there any limit to which extent we should carry our losses and to what extent we should run our profits”. We have seen in this series itself some large profits have gone into losses. Forgive me for my bad english. Thanks
Sunil Kumar Verma July 11, 2018 at 9:32 am

Dear Sir, As u have said in your various posts that we should cut our losses short and run our profits. Please mention to what extent we should carry our loss making positions and when to book profits in options. Thanks
- admin July 11, 2018 at 4:20 pm
  
  Dear Sunil,
  
  I generally take this position that the premium I pay is my stop loss. On the other hand I try to take the maximum returns from the trades that go right. To safeguard against likely reversals we have to move to next higher or lower strike depending on whether it was a CALL or PUT.
  
  Cheers.
Sandeep Kharat July 11, 2018 at 10:00 am

Nifty will be range bound or Doji (<+/- 0.5%) today as I said yesterday.No chances of upside movement. There can be small red candle . Nifty will be levels of 10900 / 10860 to 10965.
Should not think of long(call buying) from Risk:Reward point of view. For going long will be highest risk of loosing all investment.
Down side movement will begin from Friday or Monday.
Individual scripts will be choppy.
(Comments appear very late , can they be seen quickly?)
Sandeep Kharat July 11, 2018 at 10:05 am

No tension for PUT holders except some price decay . You can expect good move from Friday/Monday.
vijaya July 11, 2018 at 10:54 am

Sir, hats off to you. Your lessons are more valuable than the profits.
Your approach to the trades your conviction to stay with them and why, the periodical reminder that all trades could go wrong, are all lessons one should learn to develop right attitude towards trading. You take us along the journey of trading showing us continuously that it is not a rosy path but a path to tread with caution and conviction. I feel very blessed to have known you and for haven taken the opportunity to learn from you.
Thank you Sir.
- admin July 11, 2018 at 4:17 pm
  
  Thanks for the kind words.
  
  We just have to keep doing our job. Market will do its own work. When both are in synchronization, results will be excellent. Otherwise we take the loss.
  
  In January Expiry ( 4 days after our F&O Workshop at Bangalore ), I had a total of 7 trades. Out of 7, 6 had gone wrong. Only one was profitable. It was PUT 480 in BHARTIAIRTEL. Profit from that one trade had taken care of the 6 losses.
  
  Again, my job was only to wait. Profit was delivered by the market.
  
  We have to learn this lesson.
  
  Cheers.
Prince Nahata July 11, 2018 at 11:43 am

All our eight stocks are moving down nicely even though nifty is flat.
Reshmi P R July 11, 2018 at 1:15 pm

Sir I am holding vedi put 220pe at rs 6.3. now at profit of 4k. Should I hold it or sell it. Is more downside possible
- admin July 11, 2018 at 3:42 pm
  
  When a stock makes new 52 week low, it is generally worthwhile to wait. PUT 220 traded at above Rs. 10.00 also. The stock is weak. We do not know how weak. But there is a possibility of some more downside.
  Cheers.
Venkat July 11, 2018 at 2:06 pm

Good moves in all our PUTS… Thank you very much sir… and Thanking Market for having such move in our favour… Hoping to have good ending..
- admin July 11, 2018 at 3:42 pm
  
  let us be thankful to the market.
  Cheers.
Nathan July 11, 2018 at 3:56 pm

Pramod ji,
Today’s market movement favoured us, PUT holders, nicely.
Once again the fact that there is no correlation between index and our holdings is emphatically proved.
Again, as you used to quote, “It could be either way; we are here to accept the supremacy of the market and accept whatever the market give”
The above opinion, out of your vast experience, is being realised by many traders at practical level.
As Vijaya posted, ” Your lessons are more valuable than the profits ! ”
Thanks for your confidence giving guidance and thanks to the market.
- admin July 11, 2018 at 4:11 pm
  
  Thanks for sharing your views.
  
  Only problem is that — Markets can remain irrational than you can remain solvent. Specially in case of Option Buying. Once in a while the market will oblige us within our time frame. At other times we have to be ready to take a beating.
  
  UPL did very well today after having gone wrong yesterday.
  
  I am happy to see the participation by the readers. It proves that my efforts are bearing some result. At least few people have changed their mind about the Options Trades.
  Cheers.
Sandeep July 11, 2018 at 4:27 pm

Hello Sir… Sandeep here….
Thank you for the fantastic calls… They have performed very well today… Even though Nifty didn’t show much weakness… No I understand the fruitfulness of picking the weak stocks….
Do you see anymore downside in the UPL?
Devendra Bagul July 11, 2018 at 7:51 pm

Dear sir,
Finally for the first time in July series, market gave us reason to smile a bit today !
Hope this to be the beginning for happy ending for us.
UPL performed brilliantly for us!
I booked Profit at Rs 18 for Put 600 and entered Put 580 at Rs 9.30 although I could have got that at around Rs 8.50.
Is it right sir or have I made hurry?
Also bought TCS call and booked small profit….as fear prevailed over patience!
Now let us see how Puts of ICICI Bank, Hindalco, SBI perform in the coming days.
Thanks for your valuable advice and simplicity in explaining complicated subject like Options and selection of stocks and trades with really down to earth attitude & approach is really exceptional..
Once again thanks for everything!
With regards,
Devendra
- admin July 11, 2018 at 10:24 pm
  
  What difference does a day make?
  Two days of market up move ( 174 points ) countered by just a flat day ( 1 point up ). Totally unexpected but welcome. Rest of the Asia was down but our market was kept up by TCS and Reliance and IT sector.
  It is a relief to be temporarily out of serious trouble. We are still in negative territory but get some breathing space.
  Simplicity works.
  It has worked over 4 months previously and hopefully it will work out this time as well.
  Thanks for sharing your thoughts.
Rohit Shourya July 11, 2018 at 7:57 pm

Hi Pramod sir,
I have often taken the trades that you suggest in this forum. Sometimes which a small change. Like in this series when you had suggest TATAMOTORS 250 PE, that very day the stock had moved up well, so instead of taking the 250 PE I took the 260 PE almost at the price you suggested for the 250 PE.

Same thing I had done for Vedanta in the June series. When you had suggested the 230 PE for a certain price, that very day the stock had moved up well and I was able to take the 240 PE instead at the prices suggested by you for the 230 PE. VEDL gave me good profits in June.

Thanks for all the great discussion here.
- admin July 11, 2018 at 10:20 pm
  
  There is no happiness like a trade making good profit. But we have to repeat the success many times over. I am happy that discussions here are useful. That is the whole point of writing.
  
  Cheers.

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July 2018— Options Once Again — Day 09