iCharts Discussions

[rk_a2003]

The Global markets are correcting now. The only market that closed positive today is Indian. The magic of F&O closing .The great gambling in favor of biggie’s .Small fishes were swallowed off.

Tomorrow will be another day, likely to be a gap down opening.

[vinay28]

likely rk but I feel our events are more important (since tmrw's jackson hole event will be a black hole I feel) e.g. gdp data, rbi policy review. Also, one reason why I felt 5300 will be crossed today was that there was a large position in 5300CE shorts and writers did not want a close above 5300 but FIIs had bought index fut heavily. Even today they bought 2300+ cr.

Having said this 5360-75NS is a good resistance. Also, tmrw being last of week must close above 5388NS otherwise we will have a red weekly candle and may have next week -ve too. And the gap at 5215 of 3rd august is not far away nor is age old zone of 5170-90.

If tmrw closes below 5388, sam will happily pounce on me for his comment about last week's shooting star.

[saumya12]

Thanks all of you friends for showing concern and suggestions.

I purchased 500, 5300CE in the morning @ 3.10 and later on added 500 more @ 2.10, so total 1000 options. My trade plan was to hold/sell till nifty fill the gap and if move any further then till 5300 and then to 5325 or so. (as most of the analyst were of the opinion that nifty can move upto 5325 or so and I indicated that too in one of my previous post).

When at around 2.25 pm, price moved down quickly from 7 to 5 in spite of nifty moving upwards, (after filling the gap) and in spite of all bullish signals (at that time a W formation was in progress and the candle was out of KUMO), I thought to sell off my holding at 5.

And LO all the hell broke, my internet connection started giving trouble (as it was waiting for that crucial moment) and so the trading platform stopped functioning. I have to ‘log off / log on’ multiple times and at around 2.50 when thing stablised, I saw a price of 50 np or so. I got panicked (though I do not get panick that easily) may be because it was my first trade in options. I squared up my holdings at 40 np.

Ek karela duje neem chadha. In panic I sold off 2000 options instead of 1000. It wasn’t too late before I realized my mistake and cover 1000 @ 50 np. I think now, what would have happened if I had realized my mistake sometime after 15 minutes or so, I would have been under 11-12000 INR or so.

I learnt a few lessons (though at a cost) that DO NOT panic under any circumstance and be in your senses so as not to commit further mistake and do not try hard to save a losing trade for few bucks (when you are losing 2000 let take chance, instead of saving few more)

[apka]

saumya, a very good lesson learnt in options and very fast i must say!

A lot many times, options price may detoriate with time but if the levels and lows are intact, an upmove (like today) is always possible!

I sqrd off my position in 5300ce after seeing the fall from 4 -> 0.65 within 5 seconds because this is nrmlly what happens 30-40 mins before expiry. Options which are going to end up 0 value goto towards zero fast and 5300pe wasnt seeing any reduction in premium that time. A very different expiry today.

[vinay28]

saumya, the biggest mistake you made was square off your calls at low price. When I told you of the gamble I did mention that loss is 3 which means you don't square off. Let it go to zero. You buy correct qty depending upon how much you can afford to loose. Here the R:R was 5 theoretically.

Always remember that when you BUY options at such low value, be prepared to loose ALL.

[apka]

[saumya12]

Thanks Vinay
Thanks Apka
For your advice and suggestions.

Vinay I will keep your advice with me always in my memory.

I perhaps would not have squared off my position on such a low price if the trade had a continuity. Actually because of the break I lost my concentration or vision. and on seeing a price of 50 np I do not know what happened to me, I just panicked and did all the foolish things like trying to save that 400 INR.

Anyway....

Thanks again for your advice and suggestions.

[saumya12]

[vinay28]

saumya, see my private message

[apka]

[psalm]

[psalm]

[vinay28]

it makes sense to cover shorts about 5250NS

[apka]

Vinay, I would just call it Index management.

Couple of expiry back we saw INFY rising 80-100 points in last 2 mins before close with volume over 2 lakh shares, to make nifty close above a particular strike.

To achieve a closing above 5300, bulk buying was done. Much of their invested amount they must have covered by buying 5300ce and writing 5300pe.

We also closed at 30min resistence 5315, I feel 5218-5226 belt is coming.

[psalm]