June 2018— Options Once Again— Day 03

NIFTY opened high. Went up slightly to 10770.30 and lost the momentum. Within the first half hour it lost about 120 points from the high and did not recover much from there. Finally ended the day at 10628.50, down by 67.70 points.

Yesterday we had two new selections. CALL 320 for KPIT and PUT 80 for PNB.

I could get the Call for Rs. 2.40 and the PNB Put for Rs. 2.70. Both did not do well. KPIT after firm opening lost ground and fell by more than 2%. Call ended up at Rs. 1.75. With a lot size of 4500, this translates into a good loss.

PNB stayed strong most of the day. Even when the Bank Nifty ended up lower by more than 400 points, PNB managed to end positive for the day. This PUT closed at Rs. 2.85, so we take this as slightly profitable trade.

Star performer was BHEL.

It did what was expected from it while making the selection. Stock price went down by 6.3%. A Put buyer could not ask for more. Put 75 bought at Rs. 0.75 closed today at Rs. 3.10 after trading at Rs. 3.40 also. The low price for the stock was Rs. 74.70 , we are expecting it to go below the previous 52 week low of Rs. 73.70. Let s see if it happens and when?

BHARTI AIRTEL too did well for us. One of the readers had commented that this stock looks strong on Bollinger Bands and hence our selection was not right. Well, we can have multiple reasons for the selection to go wrong, but the price move just does not bother for Bands or Waves.

We get back to a positive situation in this trade from the negative seen yesterday.

The other stocks did move a little bit and overall it was a satisfactory day.

Here is the current status of all the trades:

Out of 9 trades, 5 are right. Major contributor to the gains is BHEL. We expect more from this trade as well as from others.

For today ( June 05, 2018), no additional trades are being suggested. Let us stay with our current 9 and see how they perform.

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

Jayesh June 5, 2018 at 12:56 pm

Sir I see more number of puts selection than calls. Is it so because market is weak? I want to know your thought process.
And I am confused between when to have patience and when to book profit eg. BHEL is rocking in this month also and already value became 5 times. How do you take decision whether to hold with patience or book profit.

admin June 6, 2018 at 12:35 am

Thanks Jayesh for the comments. Please read my replies to other comments. You will find your answer there.

As regards more PUTS than CALLS, I find that I am able to spot weakness much better than Strength. Look what happened to my Strength Choice— KPIT.

No worries, all depends on the trend in the market. In fact Index has been kept up by few stocks while many stocks were making 52 week lows. I had spotted this much earlier than MoneyControl article about 500 stocks making 52 week low in 2018.

It does not matter. Our trades should do well on month to month basis. That is all we look for.
Reply

Sandeep June 5, 2018 at 6:53 pm

Hello Sir,

When should we book profits/loss in the stock options from the above list. Is it like we leave them expire or we have to keep any specific target and exit at that point?

admin June 6, 2018 at 12:29 am

One can move to next strikes. In BHEL we can sell PUT 75 and move to PUT 70. In RELCAPITAL, we can move from 400 to 380 PUT.

Some profit will be booked as most of the traders are not comfortable being patient with In The Money Options.

Cheers.
Reply

Himanshu June 5, 2018 at 7:40 pm

hello sir
I have been reading your trading methods since you have been writing on Quora. Your trading method of Keeping It Simple is great and very helpful in selecting trades without analyzing charts and patterns.
After reading all of your answers on Quora I can select a trade effectively but still not able exit a trade effectively.
Since you have mentioned that in options one can exit after a profit of 3-4 times of premium paid
but if there is still sufficient time left for expiry and trade can move in either direction and if the move is in opposite direction, then when should I exit.
Like, Bhel put 75 I had bought at .85 and since the target of 3-4 times was achieved and I booked a profit.
but still, I thought that it would move further down so bought bhel Put70 at 1.45. Today it moved down but my premium value moved from 1.45 to 1.85 as compared to put75 from 3.1 to 4.
So I wanted to ask you that whether it was a good idea to book profit and move to a lower PUT and if not then how should I resist the temptation of squaring off early.

admin June 6, 2018 at 12:26 am

Dear Himanshu,

You have done exactly hat should have been done. If markets want to give you profit, PUT 70 will also give it. Please read my views in reply to comments by Dinesh.

Cheers.
Reply

Dinesh June 5, 2018 at 8:11 pm

Hi Pramod Sir,

Thank you for your posts. I am following the selections for June series. One question – how do you decide when to exit and ladder up/down ? Like in may series, you exited Bhel 80 put at 4.9 and bought Bhel 75 put.

Today i exited Bhel 75 put at 4.3 (had managed to buy at 1.15) and bought Bhel 70 put at 1.95

admin June 6, 2018 at 12:24 am

Dear Dinesh,

You have done the absolutely right thing. It is always a balancing act to book some profit and move to a lower strike in case of a Profitable Put trade. Let us say you had bought at Rs. 0.75. The PUT 75 has given a profit of Rs. 3.55.
Out of this Rs. 1.95 is again in the market. A sure profit of Rs. 1.60 i.e Rs. 12000 is in hand and almost Rs. 15000 is in trade. Original trading amount is also back.
It is not easy to handle emotions of a winning trade, we do not get much experience of it ( mostly we get out early ) so what you have done is a good option. I always suggest this in my F&O Workshops.
Thanks for sharing.
Reply

Ankit Bhatti June 5, 2018 at 10:45 pm

Sir, what are your views on Cipla 520 Put. It is currently trading at 542.10 with 21 point (4.11%) upside movement today itself, in an otherwise downward looking move.

admin June 6, 2018 at 12:18 am

Dear Ankit,

It is good that you are trying to find some trades on your own. Market was down today and CIPLA was a big gainer. Such one off things happen. Let us watch for the trend to emerge. Your choice anyway.
Cheers.
Reply

Himanshu June 6, 2018 at 6:17 am

Thanks sir,
And will there be any session in Delhi as I missed the previous one.

yusuf June 6, 2018 at 2:22 pm

Hello Mr Pramod..

Season’s greetings from dr yusuf patel..

I have been reading ur answers on quora n blogs since long..

It seems u r only trading in options…

I have been trading in options since few years with no much success..

If u dont mind i have few queries …

1-do u trade in index options also?

2-do u put stoploss?? Is it decided by chart of underlying security or just optiion price??

3-at a given time ur positions r in both put n calls of different stocks depending upon bullish or bearish chart of that stock?

4-do u do intraday or positional trades mainly??

5-whats ur position size as compared to trading capital in percentage terms??

Thanx in advance.,

Dr yusuf patel

Sent from my iPhone

admin June 6, 2018 at 3:51 pm

Dear Dr. Patel,

Thanks for your message here as well as on Quora.

I mostly trade in Options. However once in a while I do some day trades in Futures just to see that I have not forgotten the skills.

I trade Index Options very infrequently as stock options give better returns in case you get the direction right.

Generally my entire premium is the stop loss. But then I do not take small profits. Mostly big profits in few trades take care of the loss in others.

Buying PUTS or CALLS would depend on my reading of the stock price movement. Unfortunately, things can go wrong quite frequently. I am happy to mostly trade PUTS only. This month I have taken few CALL trades also just for the purpose of demonstration of performance of the selections made here. Maybe I am not a good trader of Calls. Jokes apart, trading decision is based on the understanding of the likely trend.

I do positional trades only. Intraday in Options just does not work.

Generally no trade takes more than 5% of the total capital.

I hope you got your answers.

Please send a mail to teachtotrade@gmail.com if you have other questions.

And please keep visiting these pages.
Reply

http://www.ucgbc.org/skype-call-recorder June 19, 2018 at 8:32 am

Thanks for the terrific post

Jayesh June 5, 2018 at 12:56 pm

Sir I see more number of puts selection than calls. Is it so because market is weak? I want to know your thought process.
And I am confused between when to have patience and when to book profit eg. BHEL is rocking in this month also and already value became 5 times. How do you take decision whether to hold with patience or book profit.
- admin June 6, 2018 at 12:35 am
  
  Thanks Jayesh for the comments. Please read my replies to other comments. You will find your answer there.
  
  As regards more PUTS than CALLS, I find that I am able to spot weakness much better than Strength. Look what happened to my Strength Choice— KPIT.
  
  No worries, all depends on the trend in the market. In fact Index has been kept up by few stocks while many stocks were making 52 week lows. I had spotted this much earlier than MoneyControl article about 500 stocks making 52 week low in 2018.
  
  It does not matter. Our trades should do well on month to month basis. That is all we look for.
Sandeep June 5, 2018 at 6:53 pm

Hello Sir,

When should we book profits/loss in the stock options from the above list. Is it like we leave them expire or we have to keep any specific target and exit at that point?
- admin June 6, 2018 at 12:29 am
  
  One can move to next strikes. In BHEL we can sell PUT 75 and move to PUT 70. In RELCAPITAL, we can move from 400 to 380 PUT.
  
  Some profit will be booked as most of the traders are not comfortable being patient with In The Money Options.
  
  Cheers.
Himanshu June 5, 2018 at 7:40 pm

hello sir
I have been reading your trading methods since you have been writing on Quora. Your trading method of Keeping It Simple is great and very helpful in selecting trades without analyzing charts and patterns.
After reading all of your answers on Quora I can select a trade effectively but still not able exit a trade effectively.
Since you have mentioned that in options one can exit after a profit of 3-4 times of premium paid
but if there is still sufficient time left for expiry and trade can move in either direction and if the move is in opposite direction, then when should I exit.
Like, Bhel put 75 I had bought at .85 and since the target of 3-4 times was achieved and I booked a profit.
but still, I thought that it would move further down so bought bhel Put70 at 1.45. Today it moved down but my premium value moved from 1.45 to 1.85 as compared to put75 from 3.1 to 4.
So I wanted to ask you that whether it was a good idea to book profit and move to a lower PUT and if not then how should I resist the temptation of squaring off early.
- admin June 6, 2018 at 12:26 am
  
  Dear Himanshu,
  
  You have done exactly hat should have been done. If markets want to give you profit, PUT 70 will also give it. Please read my views in reply to comments by Dinesh.
  
  Cheers.
Dinesh June 5, 2018 at 8:11 pm

Hi Pramod Sir,

Thank you for your posts. I am following the selections for June series. One question – how do you decide when to exit and ladder up/down ? Like in may series, you exited Bhel 80 put at 4.9 and bought Bhel 75 put.

Today i exited Bhel 75 put at 4.3 (had managed to buy at 1.15) and bought Bhel 70 put at 1.95
- admin June 6, 2018 at 12:24 am
  
  Dear Dinesh,
  
  You have done the absolutely right thing. It is always a balancing act to book some profit and move to a lower strike in case of a Profitable Put trade. Let us say you had bought at Rs. 0.75. The PUT 75 has given a profit of Rs. 3.55.
  Out of this Rs. 1.95 is again in the market. A sure profit of Rs. 1.60 i.e Rs. 12000 is in hand and almost Rs. 15000 is in trade. Original trading amount is also back.
  It is not easy to handle emotions of a winning trade, we do not get much experience of it ( mostly we get out early ) so what you have done is a good option. I always suggest this in my F&O Workshops.
  Thanks for sharing.
Ankit Bhatti June 5, 2018 at 10:45 pm

Sir, what are your views on Cipla 520 Put. It is currently trading at 542.10 with 21 point (4.11%) upside movement today itself, in an otherwise downward looking move.
- admin June 6, 2018 at 12:18 am
  
  Dear Ankit,
  
  It is good that you are trying to find some trades on your own. Market was down today and CIPLA was a big gainer. Such one off things happen. Let us watch for the trend to emerge. Your choice anyway.
  Cheers.
Himanshu June 6, 2018 at 6:17 am

Thanks sir,
And will there be any session in Delhi as I missed the previous one.
yusuf June 6, 2018 at 2:22 pm

Hello Mr Pramod..

Season’s greetings from dr yusuf patel..

I have been reading ur answers on quora n blogs since long..

It seems u r only trading in options…

I have been trading in options since few years with no much success..

If u dont mind i have few queries …

1-do u trade in index options also?

2-do u put stoploss?? Is it decided by chart of underlying security or just optiion price??

3-at a given time ur positions r in both put n calls of different stocks depending upon bullish or bearish chart of that stock?

4-do u do intraday or positional trades mainly??

5-whats ur position size as compared to trading capital in percentage terms??

Thanx in advance.,

Dr yusuf patel

Sent from my iPhone
- admin June 6, 2018 at 3:51 pm
  
  Dear Dr. Patel,
  
  Thanks for your message here as well as on Quora.
  
  I mostly trade in Options. However once in a while I do some day trades in Futures just to see that I have not forgotten the skills.
  
  I trade Index Options very infrequently as stock options give better returns in case you get the direction right.
  
  Generally my entire premium is the stop loss. But then I do not take small profits. Mostly big profits in few trades take care of the loss in others.
  
  Buying PUTS or CALLS would depend on my reading of the stock price movement. Unfortunately, things can go wrong quite frequently. I am happy to mostly trade PUTS only. This month I have taken few CALL trades also just for the purpose of demonstration of performance of the selections made here. Maybe I am not a good trader of Calls. Jokes apart, trading decision is based on the understanding of the likely trend.
  
  I do positional trades only. Intraday in Options just does not work.
  
  Generally no trade takes more than 5% of the total capital.
  
  I hope you got your answers.
  
  Please send a mail to teachtotrade@gmail.com if you have other questions.
  
  And please keep visiting these pages.
http://www.ucgbc.org/skype-call-recorder June 19, 2018 at 8:32 am

Thanks for the terrific post

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June 2018— Options Once Again— Day 03