On Friday, NIFTY ended up losing about 13 points. Not a big deal. It was down nearly 50 points at one stage within minutes of opening. In spite of whole of Asian Markets being down, NIFTY recovered quite well and closed almost flat.
Our trades mocked us today.
MARUTI simply raced away from us after going down initially. M&M went above Rs. 800 and then came down but PUT 700 looks like a faraway post where we may not reach. Only RELINFRA stayed afloat to keep our hopes alive.
I have been through such situations a number of times as a trader. It is stressful and difficult. You start losing the belief and conviction. You look at the profit and loss ( loss only at such times) and the figures really look dismal.
Then you think of missed opportunities and what else you could have done.
At times, we change our strategy and then more losses happen.
What is to be done ? :
What did we do in our times of success ?
Mostly nothing except that we stayed with our trades. Staying with the trades worked out very nicely in June 2018 and failed miserably in August. Market then rewarded us immediately in September with a huge profit so that our faith is sustained.
Apparently I am talking of the past and our worries are for our current situation. The past is a guide to what can happen. At worst, we lose around Rs. 67000. If the market obliges, we will surely either lose less or make some money. We have to condition our mind to accept the gains and loss equally.
If the market has decided that we have to fail then no amount of strategies or additional trades can protect us. Option Trades can go wrong in multiple ways and go right only in one way that is the price move has to happen very sharply. So we stay in the trade and give chance to the market to oblige us.
New Trades :
I look for the known devils. These stocks have helped us make money in the past and may do the same again.
TATAMOTORS has recovered very nicely from the recent lows. It is time it goes back to what it does normally in the later part of the month i.e. moving down.
Current price is Rs. 194.30 and I would go for PUT 180. On Friday, it traded at Rs. 2.60 at close. With a lot size of 1500 , it is a low risk trade. If the stock opens lower, I may go for a price of up to Rs. 3.00.
IDEA is among very volatile stocks. It can move up or down 5-6% on any day quite easily. The problem is how to decide whether to be on the PUT side or CALL side. I am going for the same logic as in TATAMOTORS that it has recovered about 30% from the low and should be losing some momentum now.
PUT 40 at Rs. 1.00 is a risky trade with maximum risk of Rs. 7000 and very good profit potential if it goes right.
It is to be noted that these trades do not fulfill our selection criteria and are CONTRARIAN in nature. I will be entering these trades based on the risk reward principle.
With an additional risk of Rs. 11500 for these two trades, my risk for the month goes up. But there are no rewards if risks are not taken.
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.