Option buyers are familiar with losses. They are part and parcel of life.
But sometimes market adds some insult to the injury. That is difficult to bear with but has to be done. Yesterday was one such day when NIFTY moved up smartly once again and closed just above 11300.
It is not that NIFTY ran up and caused us further loss.
The problem was that HEROMOTOCO and HINDPETRO closed lower but the PUTS too closed lower. That is time decay for us. Another big drag is YESBANK which is just not moving up with the rest of the market. On such a huge gaining day, that was one stock which closed lower.
As luck would have it, we gor DRREDDY PUT 2500 at the top price of the day at Rs. 26.00 and then saw the stock going up and the PUT going down.
Not a pretty picture with all the five trades gone wrong.
One looks for silver lining in the darkest of clouds. That is the mindset which helps us keeping our sanity and emotions under check.
HEROMOTOCO and HINDPETRO closed lower on a day when NIFTY gained 133 points. That tells us that these two are giving up the recent gains. Some consolation but we need them to go down sharply, in the same manner as they had gone up.
Other stocks too closed lower than the day’s high points. Our hopes rest on such slender threads.
We do not add any new trade today and just be watchful.
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.