Money In The Bank strategy has become the main theme of this blog.
There is a reason for it.
It has achieved success over a reasonable period of time, has gone through the turmoil of March 2020 and shown consistent results.
Traders love consistency of profits. They are willing to let some part of profit go for consistent returns. In this strategy even that letting go is not required.
Success brings in more questions.
I have answered many of those questions in earlier posts and links to those are given at the end.
Today, we are looking at how the strategy was successful when BANKNIFTY was a gainer or when it was a loser.
We generally set up a trade on the Friday prior to the expiry week. If it is possible to book a profit of about 75% of the initial credit received, we exit the trades and set up again for the same series. If that profit is not seen, we stay with the trades till the Friday before the expiry week and exit on that day with whatever profit/loss the market gives.
In the table below, BANKNIFTY value has been taken as at close on those Fridays.
Here are the numbers:
For the November 2019 series, the start date is considered as November 01, 2019 when the series commenced on this blog.
In 10 months out of 20, BANKNIFTY was a loser.
That makes it a clear 50:50 case.
But we had only 3 losing months out of 20.
The maximum loss came in March 2020 series when BANKNIFTY lost 10625 points.
The maximum profit also came when BANKNIFTY lost 731 points in April 2020 series.
Direction of the index movement has no bearing on profitability.
That is what we call non directional strategies in option jargon. I am not a great fan of that jargon.
2 of the 3 losses came when BANKNIFTY was a loser and the loss in January 2021 happened even while the index was a gainer.
What can we conclude from these numbers?
The strategy works.
It does not matter which way the index is moving.
We need the 3 stocks to outperform the index most of the time and it is a fact that this outperformance generally happens.
We have to just set up the trades and do nothing after that.
No worrying, no adjusting, no fretting or fuming. We need to stay with the trades and finally book the profit or loss and repeat the process.
July 2021 series is on and already one set of profit is booked and the second set is doing well.
We need nothing else.
Enjoy the Sunday holiday.
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Links to earlier posts: