Note: Before reading this article please read Greek Referendum Trading Tip Inside to better understand when we initiated this trade and how we are booking profits now.
The movement we wanted has come. It may not be because of the Greek crises but because of the China market crash. We are least bothered. We wanted a strong move and increase in VIX and we got it. A 1.75% increase in one day movement should make the long strangle profitable. It is just 5 days old, so not much premium is lost. VIX increased by 9.07% and closed at 17.79. Increase in VIX will make the long strangle profitable.
So those who listened to my advice and entered into a long strangle can book profits tomorrow morning before Nifty whipsaws (move in the opposite direction). Greed will now come into force and people will start investing in stocks anytime and Nifty will again resume its upward journey. This will kill VIX and take this profitable long strangle back into loss. This is what we do not want so just book profits, it does not matter even if it is small. The trade was for small profit or a small loss. Since we have made a small profit lets book it. Let not greed take over you. This small profit should be more than 10% of the blocked margin, and that is enough for us. Stick to the plan and you will become a successful trader.
Remember its about small profits more times than the small occasional losses. And you should be in profits almost every month.
Tip for traders who have subscribed my course: VIX has increased. The directional trade should be in profit. You can close it. Now its great time to trade our strategies. Nifty has fallen and the VIX has increased. It is perfect time to trade strategy 1, and if you are a bit risk taker you can straight away trade the strategy 2 on the put side.
It is also a great time to trade the conservative stock option trade. Many stocks have fallen – see if your favorite stock has fallen too. Options premium have increased. You have a chance to make almost Rs. 15,000 this expiry itself – and if there is a small loss we need not worry we have a plan to get back our money and still make the same profit.
So please don’t be lazy and take action now.
I hope you learned a lesson on how to take a decision when to trade from this Greek situation. Any major news will spike the VIX and make Nifty move. And then VIX will go back to normal. The idea is to take benefit of this situation. Markets will give you a plenty of opportunity to trade, just keep a look out for them. Listen to news or read newspapers and take action before it happens. Since we are not speculating we can take a calculated risk and you will see that most of the times these calculated risks will be profitable.
Important: The whole idea of this post was to teach you how to find opportunities to trade – how to manage risk and plan the trade, when to take the profits out and what to do if there is a loss. This was in NOT written to show that look I am a great trader. I am a 2-3% man and I look for small opportunities to make profitable trades. Most of the times I am successful, sometimes I am not and I am ok with those occasional small losses. No trader in this world can make profits in all the trades. The idea is to trade to make money to beat inflation and also beat average mutual fund returns of almost 15% a year. With conservative trades and occasional small bets like this we can easily achieve that.
Remember option trading will not make you rich in a day, a month or even a year. But in 5-6 years a lot of wealth can be accumulated.
I will definitely email my course subscribers you whenever there is a new opportunity. Ideas sent to them may or may not be uploaded in this site. Even if uploaded it will be after the opportunity is over.
You can pay the option course fees here.
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Dilip Shaw, Founder
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