What I learn't or found worth sharing in Options this week through practical experience. A thread.
1. Always create positions in tranches. Divide your capital in tranches. If its 10 Lakh, I limit it to 2.5 L per day. When in confusion further divide this 2.5 Lakh. Read on
1/n
1. Always create positions in tranches. Divide your capital in tranches. If its 10 Lakh, I limit it to 2.5 L per day. When in confusion further divide this 2.5 Lakh. Read on
1/n
On 14 July 2022, I was trading with sideways bias. My go to trade was an Iron Fly at 35000 in next week. It was expiry so I was confused. My default quantity was 12 lots/300 qty. I tested the waters with 50 qty. And in another half hour, increased by another 50...2/n
By end of day, looking at the Option Chain, I was not convinced of downside. Check this OI Sparksline.
Upper 2 Are 35000 CE, 35500 CE. Lower 2 are 35500 PE and 34500 PE.
1. Slight unwinding on 35500 CE.
2. Short Buildup on 35000 CE.
3. 35000 PE positional writers intact. 3/n
Upper 2 Are 35000 CE, 35500 CE. Lower 2 are 35500 PE and 34500 PE.
1. Slight unwinding on 35500 CE.
2. Short Buildup on 35000 CE.
3. 35000 PE positional writers intact. 3/n
4. Short Buildup on 34500 PE.
So I carried 250 Qty.
In all not much bearish. Next day, market open with slight gap up and I upped the quantity to 300 i.e. normal. Another thing, I added a 300 qty bear call spread at upper breakeven. I closed the trade at 2.3% ROI. 4/n
So I carried 250 Qty.
In all not much bearish. Next day, market open with slight gap up and I upped the quantity to 300 i.e. normal. Another thing, I added a 300 qty bear call spread at upper breakeven. I closed the trade at 2.3% ROI. 4/n
Lowering the trade size in confusion reduces the potential risk if you are wrong. Add when you are getting proven right.
2. Patience is the most important and under rated virtue of an Option Trader.
--- By gradually increasing the position size, m2m never went into loss....5/n
2. Patience is the most important and under rated virtue of an Option Trader.
--- By gradually increasing the position size, m2m never went into loss....5/n
-- M2m remained stuck at +14000 from Monday till Wednesday. Thursday morning it stuck at 18000 for 3 Hrs. Another 1 hour to hit my target of 1%. Patience to sit on right trade and wait.
-- Overall profit was 1% on total cap. Actual ROI was 2%. Patience to avoid over trading..6/n
-- Overall profit was 1% on total cap. Actual ROI was 2%. Patience to avoid over trading..6/n
Premiums were absolutely shit so waited patiently for Thursday to create position into next week.
3. Gamma Explosion around Wednesday and Thursday are imminent. Either have a small position so that spike does not cause extreme loss. Or have a winning position before Tuesday. 7/n
3. Gamma Explosion around Wednesday and Thursday are imminent. Either have a small position so that spike does not cause extreme loss. Or have a winning position before Tuesday. 7/n
4. A bird in hand is better than 2 in dreams.
Lets say target is 1%. You are already achieving 70%. Its better to book profit. No body knows what Monday will be like after Friday. Its better to take out profits and reassess the market. New day, fresh view, better profits? 8/n
Lets say target is 1%. You are already achieving 70%. Its better to book profit. No body knows what Monday will be like after Friday. Its better to take out profits and reassess the market. New day, fresh view, better profits? 8/n
5. Be extra cautious when you are winning. Winning can make you over confident.
When you are doing something wrong, Devil does not come for you. You are doing exactly what devil wants. Its only when you are doing something right that Devil targets you. To ruin you... 9/n
When you are doing something wrong, Devil does not come for you. You are doing exactly what devil wants. Its only when you are doing something right that Devil targets you. To ruin you... 9/n
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