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.
vishal agarwal March 13, 2019 at 8:50 am
Sir I also had a similar observation yesterday that Auto sector is very weak. Eicher fell 2.5% on such a bullish day.Reply
Sir over these days of rally did you trade Nifty call options?
vishal agarwal March 13, 2019 at 3:37 pm
Finally, Yes bank decided to take some cues from the move of its Bank Nifty Index. Still, miles to go before 260CE becomes ITM.Reply
Sandeep Srivastava March 13, 2019 at 4:22 pm
Yes finally we have something in green now. Hope it continues with the momentum and other trades also fall in line.Reply
vishal agarwal March 13, 2019 at 4:53 pm
Sir Zeel is now weak over seven days horizon, do you think the time has come to pick 420/410 PE or better to give it a pass?Reply
vishal agarwal March 13, 2019 at 4:57 pm
Sir Tata motors after running too hard failed to get past 200 mark and seem to have resumed its downward march. Do you see any merit in its PE? It is weak over 1 week period and continuously showing weakness along with other Auto stocks in otherwise a bullish market.Reply