What difference does a day make?
In case of stock markets it makes a real big difference. After NIFTY had moved down by about 175 points on June 27 and 28, it came back with a vengeance to gain 125 points and closed above 10700.
Fortunately for us, this move came a day after the Expiry of June contracts. Had this move come a day earlier, our Options Positions would not have shown the profit that they actually did.
Coming back to the Safe Strategy of this Put Spread, these big moves had no impact on our position.
It is almost as if nothing has happened.
True the strategy is not yet into profit, but it is not losing money either. More important is the fact that it does not matter if the market is going up or down. We are not concerned till it shows signs of going below 10500.
The present position of the 3 PUTS as of close on June 29, 2018 is:
NIFTY 10800 PUT —– Rs. 192 ( Buy Trade)
NIFTY 10700 PUT —- Rs. 142.50 ( Sell Trade)
NIFTY 10400 PUT — Rs. 53.45 ( Sell trade)
The difference between the BUY and SELL positions is Rs. 3.95 which is our notional loss at present.
This position will keep changing slightly every day but not likely to become alarming.
So we continue with this safe and sedate strategy unmindful of the day to day fluctuations of the markets.
Next review after two more trading sessions.
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.