The month of March 2019 was not productive for our trades. It ended with a loss of a little more than Rs. 25000.
Only 3 trades right out of 12. That is 25% success rate. It is still better than the 20% expected success rate for option buyers but did not make money.
Traders must review their profits as well as losses to learn from their experience. Let us do that now.
We had 3 CALL trades during the month and 9 PUT trades ( 2 of them on expiry day just to take a chance ) . NIFTY moved up from 10792 to 11570 in the 18 trading days. That is an up move of 778 points. In such situation it is expected that PUT trades will not do well.
Only MARUTI trade gave some profit which actually could have been slightly higher. HEROMOTOCO moved much lower in price but all the premium was taken away by time and it did not become In The Money option at any time. Tough luck.
YESBANK was the only good CALL trade. That too had many reversals before moving up steadily in the last 3 days of trading. We missed to cash RELIANCE 1380 CALL when it moved above Rs. 30.00. But such exits are not part of our method. We wait for bigger profits in the right trades and when those profit arrive, it is wonderful. When the trade goes back to loss, the feeling is terrible but one must learn to move on.
It is not about managing the wrong trades, we must focus on the right trades and try to take maximum return from them. Sometime we fail, so be it. There is always a next time. Let us not look for instant profits. It is not a one day match. It is a day to day work activity in which we have to keep going without any excitement or remorse unmindful of profit or loss.
Some readers have suggested to make changes to the method, some have suggested to buy more CALLS than PUTS and some have suggested that trading Index Options would be the better thing to do.
Well, I have been there and done all of the above and more in the past. The results were not good.
Staying with a method is tough at times, but pays off ultimately. Keeping the belief is important, specially when the going is not good.
March and February 2019 were losing months. The combined loss of these two months is Rs. 55623.
Any loss is bad and we should be concerned. But let us not lose sight of the fact that we had a profit of Rs. 178579 in January 2019 by following the same method. Looking at three months together does not look bad.
Summary of 11 Months since May 2018 :
Out of 11 months, 7 have been profitable and 4 are losing months.
Total Contracts Traded — 146
Right ——————— 55
Wrong ——————– 91
That is a success rate of 37.6% which is good as far as option buying trades are concerned.
These 146 trades done over about 220 trading days have resulted into a profit of Rs. 666210 in 11 months after accounting for the recent losses.
And we never deployed more than Rs. 100000 out of our capital amount.
What else do we want from a method?
Most of the option buyers do not make money. Those extremely lucky or very good at trading may double their capital in a year. We have done much better than that already and still there are doubts.
Let us set aside those doubts and keep the belief.
Keep trading. Profits will follow.
Trade cautiously, trade profitably.
Enjoy the weekend.