Greed and fear rule the market.
Both make us go for wrong decisions. Strategies are meant to take care of emotions but we are humans, we are affected by the ups and downs. We are affected by seeing the trades recover from losses, raise hopes and then go back into a big loss.
Yesterday was the day when this effect came to the forefront.
All the 12 stocks of BANKNIFTY were losers.
The biggest loser among them was HDFCBANK.
Let us have a look at the MTM position:
Our trades had taken whole of last week to get back to a profit of Rs. 3900 from almost same position. In a single session it is back there.
This is the roller coaster ride of trading. Not for the faint of heart.
The trouble spot is HDFCBANK. The PUT 1500 is now ITM and will gain sharply if further fall continues.
KOTAKBANK too is near the strike.
The problem is that the hedging trade is still 1000 points away.
But just one day of recovery can make it alright.
This situation has not happened for the first time. We lived through all kinds of situations in the past and will go through this time too.
At worst, we will not be making a profit in this month.
We stay with the trades and do nothing.
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.