November 2018— Option Buying — Day 14

NIFTY moved a lot yesterday to go nowhere.

It was volatile in a narrow range. Yes, 120-130 points is a narrow range these days. It opened high, went higher, cooled off from those levels and suddenly down 50 points. Then it moved up and closed just 6 points in the red. A very difficult day for the day trading types.

Not an easy day for our types too.

I have been saying it repeatedly that the volatility is here to stay. We need to factor it in our trades. High premiums is one of the problems we shall be facing. That makes it tough for us.

We saw it yesterday how trades can go wrong. MARUTI went wrong badly. It just kept on moving higher irrespective of what NIFTY was doing. M&M came down towards the close. But we are so far gone in that trade that the slight gains do not make us happy. IDEA went wrong but TATAMOTORS did well. A mixed bag for the day.

On the whole, we went a little more in the red. Not by much but negative all the same.

There is temptation to take a few more trades. But protecting the capital is very important. Already about Rs. 78000 are committed in these trades. Remember that the entire amount can be lost. And new trade has got as much chance of success as the current trades. So we shall just stay with our current trades and expect that one or two will get into the money soon.

No new trades for the day.

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.

Comments

Sachin November 15, 2018 at 8:32 am

What are your views on PC jewellers ?
I am holding its 100 Call at 8.2 and 70 Put at 2.8, as I was expecting it will move upwards, also it’s 120 Call is still priced at 2-3 RS.
It’s result came yesterday, it went down..Call decreased much faster as compared to increase in Put as the Put was OTM. Should I continue keep holding both the options.

admin November 15, 2018 at 8:43 am

The price of volatility. Once the results are out, the volatility declines. Unless a very sharp move happens, one loses premium on both sides. This stock is inherently volatile. You can hold both options at least for another two days and then take a decision.

Cheers.
Reply
- admin November 15, 2018 at 10:42 pm
  
  See how the moves happen in this stock. Now your PUT is at Rs. 8.00 and CALL at Rs. 2.00. Further down move is needed. All the best.
  Reply
  - Sachin November 16, 2018 at 12:13 am
    
    Yes sir, it totally reversed, but still not in my favour as call declined more than increase in put..also, I got excited and bought another PUT at 4.6. So now holding 2 lots, and it closed at around 5.
    It’s difficult to control your emotions.
    Reply

vishal agarwal November 15, 2018 at 12:51 pm

Sir do you suggest shifting the idea strike from 40 to may be 37 or lower?

admin November 15, 2018 at 3:40 pm

Yes, it would be wise to exit PUT 40 and enter PUT 37.5.

Cheers.
Reply

divyank November 15, 2018 at 1:15 pm

that’s the lava from idea came out which trapped for that many days. hope for more movement.

admin November 15, 2018 at 3:41 pm

Let us be hopeful as well as cautious. Market does not like euphoria. Also remember, we have not yet made monet this month.

Cheers.
Reply

Nikhil Dixit November 15, 2018 at 1:46 pm

Mr Kumar, I’ve no faith in Indusind Bank trade. The stock is moving in a range and I strongly believe that it is not going to touch 1400. But there’s not much left now. PUT 1400 is already at 7.5 from 21. What do you think should be a wise decision. Taking a sum of 2100 and moving out of the trade or just forget the premium and let the trade run?? Are you going to move out of the trade??

admin November 15, 2018 at 3:39 pm

I agree that it is moving in a range. It may come to 1400 levels or most likely not. Did you see Yesbank move today? In a single day stocks come down 7-8% or go up 20% like Jet Airways today. A similar move will bring it to 1400 in no time. We had initiated the trade because it was showing weakness. Somehow the trend changed along with the market direction. While entering the trade it was known that our maximum risk is Rs. 6600. Why the doubts now?

I am not moving out of the trade.

Cheers.
Reply
Nikhil Dixir November 16, 2018 at 12:30 am

You’re the best mentor one could ever have. Thank you 🙂
Reply

Ashish Kbrishna K November 15, 2018 at 6:52 pm

Dear Sir,
What should be one’s trading capital for trading using this method?
I have been following this blog since past 4 months and I am paper trading my own selections based on this method, and I want to trade real money using the method. So, can you please suggest a “comfortable” amount of capital required to trade this method?

Thanks in Advance.

Ashish Krishna November 15, 2018 at 6:54 pm

Thanks in Advance.

admin November 15, 2018 at 6:58 pm

A minimum of Rs. 200000 is a must. Most of the trades will go wrong. We make money from right trades.
Some reserve capital is a must.
Cheers.
Reply
- Ashish krishna November 16, 2018 at 12:59 pm
  
  Dear Sir,
  Thank you for your reply. It really helps.
  Reply

Sachin November 15, 2018 at 7:29 pm

Dear Sir,
Got to know about you few days back. Since then, the first thing I do every morning after waking up is waiting for your today’s post. I am a CA and have studied about Call n put during my studies, but when I entered the practical world, it’s all together different. After having the beginner’s luck way back 4-5 yrs, I started losing money and then eventually left this Options world. This thing happened 4-5 times and now i am again back, again ready to test my luck. While going through your post starting this month series, I couldn’t find the actual methodology adopted to select the stocks. Can you please provide the link of your strategy or post it somewhere in this site in a different tab, for easy access (have checked your quora post also, but one post leads to another, and then we get lost in so many wise words).

admin November 15, 2018 at 8:11 pm

Dear Sachin,

This question comes repeatedly.

You can find the answers here:

https://optionsnext.com/blog/options-trading-selecting-a-stock-and-strike-price/

You may to go a little to and fro with additional links in the post. But it works.

Cheers.
Reply

Sachin November 15, 2018 at 8:32 am

What are your views on PC jewellers ?
I am holding its 100 Call at 8.2 and 70 Put at 2.8, as I was expecting it will move upwards, also it’s 120 Call is still priced at 2-3 RS.
It’s result came yesterday, it went down..Call decreased much faster as compared to increase in Put as the Put was OTM. Should I continue keep holding both the options.
- admin November 15, 2018 at 8:43 am
  
  The price of volatility. Once the results are out, the volatility declines. Unless a very sharp move happens, one loses premium on both sides. This stock is inherently volatile. You can hold both options at least for another two days and then take a decision.
  
  Cheers.
  - admin November 15, 2018 at 10:42 pm
    
    See how the moves happen in this stock. Now your PUT is at Rs. 8.00 and CALL at Rs. 2.00. Further down move is needed. All the best.
    - Sachin November 16, 2018 at 12:13 am
      
      Yes sir, it totally reversed, but still not in my favour as call declined more than increase in put..also, I got excited and bought another PUT at 4.6. So now holding 2 lots, and it closed at around 5.
      It’s difficult to control your emotions.
vishal agarwal November 15, 2018 at 12:51 pm

Sir do you suggest shifting the idea strike from 40 to may be 37 or lower?
- admin November 15, 2018 at 3:40 pm
  
  Yes, it would be wise to exit PUT 40 and enter PUT 37.5.
  
  Cheers.
divyank November 15, 2018 at 1:15 pm

that’s the lava from idea came out which trapped for that many days. hope for more movement.
- admin November 15, 2018 at 3:41 pm
  
  Let us be hopeful as well as cautious. Market does not like euphoria. Also remember, we have not yet made monet this month.
  
  Cheers.
Nikhil Dixit November 15, 2018 at 1:46 pm

Mr Kumar, I’ve no faith in Indusind Bank trade. The stock is moving in a range and I strongly believe that it is not going to touch 1400. But there’s not much left now. PUT 1400 is already at 7.5 from 21. What do you think should be a wise decision. Taking a sum of 2100 and moving out of the trade or just forget the premium and let the trade run?? Are you going to move out of the trade??
- admin November 15, 2018 at 3:39 pm
  
  I agree that it is moving in a range. It may come to 1400 levels or most likely not. Did you see Yesbank move today? In a single day stocks come down 7-8% or go up 20% like Jet Airways today. A similar move will bring it to 1400 in no time. We had initiated the trade because it was showing weakness. Somehow the trend changed along with the market direction. While entering the trade it was known that our maximum risk is Rs. 6600. Why the doubts now?
  
  I am not moving out of the trade.
  
  Cheers.
- Nikhil Dixir November 16, 2018 at 12:30 am
  
  You’re the best mentor one could ever have. Thank you 🙂
Ashish Kbrishna K November 15, 2018 at 6:52 pm

Dear Sir,
What should be one’s trading capital for trading using this method?
I have been following this blog since past 4 months and I am paper trading my own selections based on this method, and I want to trade real money using the method. So, can you please suggest a “comfortable” amount of capital required to trade this method?

Thanks in Advance.
Ashish Krishna November 15, 2018 at 6:54 pm

Dear Sir,
What should be one’s trading capital for trading using this method?
I have been following this blog since past 4 months and I am paper trading my own selections based on this method, and I want to trade real money using the method. So, can you please suggest a “comfortable” amount of capital required to trade this method?

Thanks in Advance.
- admin November 15, 2018 at 6:58 pm
  
  A minimum of Rs. 200000 is a must. Most of the trades will go wrong. We make money from right trades.
  Some reserve capital is a must.
  Cheers.
  - Ashish krishna November 16, 2018 at 12:59 pm
    
    Dear Sir,
    Thank you for your reply. It really helps.
Sachin November 15, 2018 at 7:29 pm

Dear Sir,
Got to know about you few days back. Since then, the first thing I do every morning after waking up is waiting for your today’s post. I am a CA and have studied about Call n put during my studies, but when I entered the practical world, it’s all together different. After having the beginner’s luck way back 4-5 yrs, I started losing money and then eventually left this Options world. This thing happened 4-5 times and now i am again back, again ready to test my luck. While going through your post starting this month series, I couldn’t find the actual methodology adopted to select the stocks. Can you please provide the link of your strategy or post it somewhere in this site in a different tab, for easy access (have checked your quora post also, but one post leads to another, and then we get lost in so many wise words).
- admin November 15, 2018 at 8:11 pm
  
  Dear Sachin,
  
  This question comes repeatedly.
  
  You can find the answers here:
  
  https://optionsnext.com/blog/options-trading-selecting-a-stock-and-strike-price/
  
  You may to go a little to and fro with additional links in the post. But it works.
  
  Cheers.

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November 2018— Option Buying — Day 14