Refer my post and email dated June 29, 2015 – Greece Crisis What Should You Trade.
On that day I told you that VIX has increased considerably and it is a great time to sell out of the money options and also hedge them by buying options. People who had done that may be in good profits now.
The VIX has come considerably down and its hovering near 15.41. From 18.18 to 15.41 in 3 days. This is a drop of 15.25%. Excellent for sellers. Both the calls and puts option premiums would have shrunken and the trade can be taken off. As the small profit wherever that may be has been achieved there is no need to stay in the trade.
See its profit vs time. Even if the profit is 2% – it has come pretty fast in 3 odd days. Is there any need to be greedy and wait for the options to decrease more in value? We made a quick profit and we should exit. This is how a good trader takes his trade. The original plan was to make a quick profit – so no matter what happens we will NOT alter that plan.
Kill that devil called GREED and you will become a better trader I bet.
Situations like this can bring in quick profits. 🙂 So we must look out for such situations. Since VIX is directly related to world news and happenings we can make use of it to decide, to some extend, time to sell or buy options.
Well that does not mean we will never be wrong. We can be and there should be a plan to exit. For traders who have taken my course the plan is to go straight to Strategy 2. If you haven’t taken my course and reading this you can make your own plan – whatever it is, be a stop loss or adjustments. But you must TAKE ACTION when things go wrong.
Moreover Nifty also remained in a range – low of 8195 and currently around 8460. Those 200-300 odd points movement does not matter when VIX has decreased considerably because even if one option will lose money the other makes more than the losses. Ultimately the trade is in profit.
When VIX increases take you chances. Sell options and hedge them properly, set your target profits and exit. But you must also have a Plan B if VIX does not decrease or if anything goes wrong.
Lets wait for another opportunity. 🙂
Subscribe to My Newsletter:
If you subscribe these are the benefits:
1. You get a FREE eBook on 24 great option strategies written by NSE – yours to keep forever.
2. Instant trading tips notification if any situation arises.
3. Get notified as soon as a new trading strategy is written in this site.
4. You learn something new in every email.
You Can Read More On My Site
Save Money on Options and Futures TradingTraditional brokers take away a lot of money by charging high brokerage in each lot traded, however this broker does not charge for each lot. If you trade 5/10/100 lots in a single order they charge only Rs.20/- for each order traded irrespective of lots being traded at different times. Same for exiting. If you exit all 5/10/100 lots in a single order your total brokerage comes to Rs.40/-. And they do not charge anything for buying & selling stocks. It takes 5 minutes to open an account online. Click here and Open Free Account with them today >>
Dilip Shaw, Founder
COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.
DISCLAIMER: I am NOT an Investment Adviser (IA). I am an Authorized Person (AP) of a Stock Broker. I do not give tips or advisory services by SMS, Email, or WhatsApp or any other forms of social media. I strictly adhere to laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles in this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given in this website. I am not responsible for any investment decision you take after reading any article in this website. Click here to read the disclaimer in full.