Another day, another big decline in Indices.
NIFTY shed 175 points yesterday. It happened to be fifth continuous day the index has gone down. For us, the day was good.
BHARTI and TATAMOTORS which had not done well on Friday became ITM options on Monday.
Yesterday’s new entrant HINDPETRO went wrong initially and then reversed giving us good value for our PUT.
Could not/did not exit the IBULHSGFIN trade as the premium for lower strikes was high. This trade too did well for the day.
PNB too contributed.
IDEA trade was suggested but as the suggested price was not there at all throughout the day, it is considered as not traded.
Here is how the position looks now:
What Now ? :
This is the question one faces when sitting on a big profit.
Most of the traders ( option buyers) do not face it because they do not wait that long in profit. But it is a reality for us now.
Let us address this question.
We are not sure where the stock is going. On Friday it made a low at Rs. 765. We would like to see it there again but reverse may also happen. It would be advisable to get out from PUT 1160 and buy PUT 980 at near Rs. 40. We book some profit and stay in the trade if it moves lower. If we go wrong, the loss can not exceed Rs. 20000. That is the part profit we have to sacrifice. Or just exit and forget about it.
Some readers have already done it. Take the profit and move to PUT 67.5.
If there is further move, even this PUT will make money.
If and when the stock moves to Rs. 625 level, exit from PUT 640 and move to PUT 620. Profit protection is a must so close to expiry. If it starts going wrong, get out in the price range of Rs. 10-11.
IN other stocks, I shall stay in the trades watchfully.
HINDPETRO looks good for a 3-4% further fall which should add decently to PUT value. Same for other stocks.
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.