Two years ago, I started a series on Options Buying on this blog.
At that time, it was not a series. It was a tentative first step into the unknown.
Option Buyers do not make money. 80% options expire worthless. Time decay kills the option premiums. These were the things we were trying to fight against.
Two years later, the series is continuing.
This itself is a proof that Option Buying can be profitable if done rightly.
The key was to find the right way, to have a method and have belief in the method when the going gets tough. Without a method and belief, we would not be here today.
This is how two years have gone.
Year 1 gave a profit of Rs. 649223 whereas Year 2 was profitable by Rs. 524625.
Number of trades went up in the second year and the success % age declined slightly. That made a big difference in the earned profits.
Still, the numbers are not in a great variance. That means the method worked over last 2 years and may work in future too.
One of the major requirements of our method is to wait patiently in the trades that go right. Without this patient wait, we shall not be seeing a profit. Patience is a necessary lesson to be learnt.
One of the possible reasons of comparably poor performance over second year is — the compulsory physical settlement of option contracts.
We are not able to carry the In The Money options into expiry week which is at times detrimental to our trades. In the previous year, we made many successful trades in the expiry week. Now that period is not available.
We fought with our hands tied for most part of the year and still finished the year with a good profit.
Importance of big profits:
In the first year, the biggest profit in a month was Rs. 430000 in September 2018.
In the second year, the biggest profit in a month was Rs. 492000 in March 2020.
Take away these two months and the profit would reduce to Rs. 251000.
That should make the case for bagging the good profits when market is in mood to be kind to us.
Let us be more realistic.
If two best months are not counted, let us ignore two worst months also. Those months would be August 2018 and April 2020 with losses of nearly Rs. 98000 and Rs. 73000 respectively.
In such a case the profit would be Rs. 424000.
It looks bad compared to Rs. 1173000 actually realized but is still a decent profit — more than 100% per year.
We have seen that a method, belief in the method, patience and some luck can give extraordinary kind of profits.
Only we have to be there to take these profits.
We also know that past performance is no guarantee for future results but that is something to go on.
We shall continue with the journey into the third year now with some hope.
Thanks for reading.
Enjoy the weekend. Be here again tomorrow for the review of the week.
Stay at home. Stay safe and healthy.
Earlier posts :