Low India VIX is Creating a Problem

This is a copy of my email sent to my subscribers on 04-Sep-2023. You can also sign to receive such emails directly in your inbox.

Low India VIX is creating a problem. The markets are in a strange situation neither is it volatile nor India VIX is getting on the higher side.

After so many years traders have seen this prolonged low India VIX for so many days. From April 2023, India VIX is below 15 making a tough call for option buyers as well as sellers.

For option buyers, this is a problem as slow movement kills the premium and for sellers, this reduces the profit and they get discouraged from trading.

If it is not volatile buyers of options will most likely lose money.

If the options premiums are lower, then sellers will make money but it will not be very satisfactory.

Therefore during low India VIX, the volume of trading gets reduced.

But my teachings have always been the FIRST RULE of what Warren Buffet has said:

Never lose money in stock markets.

My addition: Even 1 Rupee profit is better than losing money.

Here are his exact words:

The first rule of an investment is don’t lose money. And the second rule of an investment is don’t forget the first rule.

Here are some more very popular quotes from legendary billionaire investor Warren Buffett:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Be fearful when others are greedy, and be greedy when others are fearful.

If you have not lost money in stock markets you are very lucky. But if you have lost then ask yourself – which situation was better:

1. A profit of just Rs.1/- after paying brokerages and taxes, or
2. Your current loss.

Anyone would pick a profit of Rs.1/-, but when you were trading did you ever think of proper risk management so that you do not lose too much?

If you have still not lost too much then good. Still not lost too much is less than 5 lakhs. Anything beyond this is too much. I lost 7 lakhs.

Please do not do revenge trading – you will destroy more of your wealth.

Learn to be both a conservative trader and an investor. It will help.

How long will this continue?

Some major news has to come out which has to shake the markets. Once that happens India VIX will go up. And once India VIX goes up option sellers will join the markets. Once the sellers join the markets the volume will increase.

India VIX is good for option sellers as the likelihood of the profit goes up. But greed does not allow them to sell is a different chapter altogether.

If you are an option seller you can keep selling options. Your return on investments will reduce but the success rate will increase.

Please hedge and sell options as selling options is a huge risk. By hedging you reduce the risk.

You can learn option selling with hedging in my paid course.

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