About Me | Mistakes To Avoid In Trading | 3% A Month Is Not Less
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Note: Part of my newsletter sent to my subscribers sent on September 14, 2015.
Refer my email dated: SEPTEMBER 10, 2015
You can find it here:
I had written to take this trade:
For example consider this trade right now:
Sell: 24-Sep-15 PE 7,700.00 at 152.00
Buy: 24-Sep-15 PE 7,600.00 at 115.00
Why? Because INDIA VIX is at 24.88 – which is great for option writers.
Max profit in this trade is if Nifty is above 7700 on 24 September 2015, the expiry day – which will be 152-115 = 37 points and max loss will be 100-37 = 63 points.
So now either you lose 63 or make 37 – there can be no other loss. But what if Nifty goes up tomorrow by 100 points and VIX drops? You will be in 10-15 points profit in one day and close the trade. Thatâ€™s it – all worries gone and you made a quick profit.
This is what happens when you hedge your positions.
Right now INDIA VIX has fallen to 24.56 and
24-Sep-15 PE 7,700.00 is at 92.00
24-Sep-15 PE 7,600.00 is at 67.90
So the position is making around 13 points profit. 152-92 = 60 and 67.9-115 = -47.1
60-47.1 = 12.9
This is a return of 1.3% in 4 days.
Those who traded, may close the position as this is considered a good return in 4 days itself.
As you can see INDIA VIX was 24.88 and today its 24.56 – so not much of a fall – BUT Delta & Theta made the profit. Nifty moved 100 points up and 4 days passed.
What if Nifty had fallen 100 points?
Depending on VIX, the loss would still be 10-15 points BUT for a naked seller it would be 60 points and thats huge.
He would have stopped out with huge loss in just 4 days with Nifty moving 100 points only. But the hedged trader can wait for Nifty again to go up and take his profits. In any case the max loss is 63 points.
Frankly most of these kind of trades make money.
I hope you understand why my emphasis is on hedging.
Enjoy the profits.
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What you should do now1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.
2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.
3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.
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Here is complete process of my course1. Once you pay I will send you the course materials for studying to your email.
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3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
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Within one month you can start trading on your own. No need to depend on anyone once you are on your own.
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You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
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