Lots of people ask me if I have any strategy to trade and make profit on expiry day. I ask them a counter question – why you want to trade on expiry day only? Most of them have no answer. However some say because options are dying (expiring) that day why not benefit from this situation?

OK let’s forget options for some time. Let’s assume a close relative of yours is dying on a day and you go to the hospital to see him for the last time. At that time do you think about making money using him or you try your best to console him and save him?

I hope you get the point. The day options are expiring it’s better not to trade them rather think about next month or wait for a better opportunity to trade.

Risk reward ratio is pathetic on expiry day trading.

Please remember that on expiry day all options whether they are In The Money (ITM) or Out of The Money (OTM), have lost most of their time value. Any option with 2-3% away (Out of The Money) from the spot price will be near 0 by 12 pm and all ITM (In The Money) options will have only the intrinsic value and no time value.

Intrinsic value is the distance between the spot price of the stock and the strike price of options. For example if Nifty strike price is 8250, then 8500 strike call option will be near zero by 12 pm and 8150 call option which is In The Money will be near 100 by 12 pm. Basically all In The Money options will behave like Futures not Options.

All options on expiry day are near Delta of 1 or 0. All Out of The Money (OTM) options have near ZERO Delta and all In The Money options have Delta near 1. Just like Futures delta.

So if you buy on expiry day 8150 Call if Nifty is at 8250, then if Nifty goes up 10 points you will make a profit of 10 points just like Futures buy, and if Nifty falls by 10 points you will lose 10 points just like Futures losses. Can you see the risks involved?

If you sell ITM (In The Money) options let us see what happens:

Assuming 8150 Call is sold when spot of Nifty is at 8250. If Nifty comes down 10 points the seller will make a profit of 10 points and if Nifty goes up 10 points the seller will lose 10 points. What if Nifty goes up and reaches 8350 at 3.30 pm when markets close? The seller of 8150 option will lose 100 points.

Of course since there is not much premium in Out of The Money Options very rarely traders trade them on expiry day. The buyer of options knows that it may expire worthless and they may lose 100% of the money buying them. The sellers do not get much money to sell OTM options and they think risk is too much for such a low payment so they do not sell OTM options.

The problem is in spite of all these risks people keep searching Google for expiry day trading.

So Why People Like to Know About Expiry Day Trading?

1. They hear from some source stories that someone is trading on expiring day and making good money. The problem is no one wants to know who that person is or exactly what they are doing. And if there is any truth in whatever they heard. Since they do not know the source and therefore do not know how they are trading – they Google it to try to find out.

2. Early in the morning on expiry day ATM (At The Money) options in Nifty are around 20-30 depending on VIX (volatility). Sellers of options want to make quick money on expiry day. So they think if they sell both ATM Call and Put options early in the morning and if Nifty expires within 20-30 points they can easily make 20-30 points in one day. Agreed if they are correct they will make. Let’s assume they get 25+25 points = 50 points credit by selling At The Money options. So if Nifty expires within 50 points range either above or below they will make a profit. What they forget is that on the expiry day a lot of movement is seen. This is very normal as all derivative traders are closing their position. The movement starts after 12 pm when these people come into action. So even if they make a profit in two expiry days, the third expiry day may see a huge move and all they made in last 2 months is gone plus markets will take away some principal as well. Where is the profit? Note that this is the most popular trade on expiry day. Hope after reading this you know the risks involved and will not trade this.

3. If one day trade can make them rich why trade for one full month: This again is a lazy trader’s mindset that is why they search for expiry day trading. They think if they can get rich by trading just one day in a month then why do all the hard work for the full month? They forget the simple fact that no one in the history of trading has ever become very rich by trading on the expiry day. Another fact for those who think on these lines – do you think you will become extremely rich by trading (working) just 12 days in a year? How can that logic be justified? Stock market trading is a business. Name me one person who has become extremely rich in any business in the world by just working 12 days in a year? Is that possible? In fact business owners work more than people who are doing a job because they know the more they work the more money they can make. Which is a fact. People who chose to work hard and not take lazy route to success are the ones who actually archive success. May be it takes a few years but at least they succeed. People who take the lazy path to make money never see success ever, not only that they are the ones who are the most stressed people in this world, because they see their hard working friends earning more than 10 times than they do within a few years and they are nowhere near them. This gives them stress and jealously. But dude you are responsible for your failures as you chose the wrong path to achieve success when time came to decide the path. So blame yourself no one else.

Frankly this is my personal experience. When I was a lazy person and was looking to make easy money without working hard through stock markets I lost all my savings in three years 2007-10. To survive I had to take a 1 lakh loan. My wife who was heavily pregnant at that time told me the truth – God is punishing you for being lazy and still trying to make money taking short cuts. You are responsible for this situation, no one else is. However you still have time, you are young just chose the correct path to make money. Start working hard from today onwards.

And man how correct she was. I thank her for changing my life. The very next day I started researching and reading about stock markets, options and futures trading, managing finances, mutual funds etc as well as trying to improve my job skills by reading related books.

The idea was to improve my skills at my current job plus make money from investing in stock markets as well.

The result? I got a promotion within 3 months in my job. Salary doubled. 1 lakh loan that was to be paid back within 2 years, I paid back in 6 months. Started investing in four of the best mutual funds of that time within 6 months through the SIP route. Within 2 years I bought a car and a house. Can you see what I destroyed in 3 years through laziness, I got back 10 times that in 2 years only. So do not think hard work takes too much of time to pay back. It only takes a few years and your life can change.

If you chose the wrong path to succeed you will never see success for years. In fact you may end up destroying whatever you had done all these years and then regret your decision for the rest of your life.

Yes I do get calls from people aged above 50 who have destroyed their wealth trying to make too much of money and taking too much of risk in stock markets without knowing what they are doing. The result is obvious some are sitting at a loss of 40 lakhs and some more – 2 crores. If you are young and reading this please do not try to take any short cut to make money it will never work and will take away whatever you have made till today.

Do not think that you are an exception – you are not. In Gods eyes everyone is same – it does not matter you are rich or poor the almighty will punish you if you take the wrong path.

Name one person who took short cuts to make money in any business in this world and is living a rich life today. In real world such a person does not exist and will never exist. So how can you be one?

The worst part is these people who are above 50 and lost too much money left their high paying jobs to trade the stock markets and lost everything they had made. The problem is since they are now near retirement age they will not get a job – so everything they achieved in life is gone. Please do not be in that situation when you are 60.

I get too many calls from young people who want to leave their jobs and trade full time to make money. I do not understand why. After all you got this job after a lot of years of studies and hard work – so why leave it to live a lazy life? Can you not trade while on a job? Yes you can, so why leave it? Even I had a job while I was trading. Since I am a very conservative trader who is happy with even 1% profit a month – the profits coming from stock markets never bothered me, and I could concentrate on my job as well and within years was promoted to a very senior position. So basically I was willing to work hard and gain knowledge because of this my life improved drastically. Think about this – I also started this website in 2013-14 to help traders get some knowledge and imagine the time I had to work. Almost 12 hours daily. Even while traveling I never wasted time – I had books in my bag so that I could read them while in a metro.

When you chose the right path – right things starts happening automatically in your life. If you chose the wrong path – wrong things will start happening automatically.

I hope it is now clear that risk reward ratio is not good in expiry day trading so I request you to avoid it. Trade with knowledge and have patience while trading. No person on this earth has ever become rich overnight by trading though many have lost their fortunes trading aggressively overnight in few months. But traders who are patient and follow proper risk-management techniques and giving themselves time to make money are actually making money. Now you chose which path you want to travel.

People who think it’s easy to make money though stock markets actually speculate to make money fast, you know the results how can a speculator make money fast? One bad speculation can take away months of profits and this will go on for years. People who have knowledge and trade to make money slowly actually end up creating a lot of wealth over the years and lead a happy life and retire rich.

The path that looks easy to achieve success actually does not exist – it exist only in dreams not in reality. The path which looks a long way to travel and hard to travel actually leads to success though it may take some time. But frankly it does not take too much of time. Ask any successful people in your neighborhood and they will tell exactly what I am saying.

Just 45 days back I met with a serious accident and doctors have advised me to take rest for next 3 months – but I am still working around 10 hours a day and I am very happy working. I have a big excuse to give myself to hit the bed day and night but I am not doing it. I love working hard and cannot live without it. Hard work pays and I will never forget what my wife said years ago which changed my life.

I hope you will refrain from expiry day trading and leaving your job to become a full time trader. When you can do both why trade full time? Isn’t it easy to make Rs. 50,000 a month from a job but compare this to making Rs. 50,000 a month from trading. May be you can make but a very large capital is required to make that amount. And do not think trading full time is easy. It is actually more difficult than doing a job. You will be stressed seeing the stock moving in the other direction of your trade. Be ready to take stress from 9 am to 3.30 pm. A job is much better really. My point is when you can make money from 2 paths, why leave one path when you can travel both the paths without stress?

Stop thinking of making money easily from stock markets it does not exist. Start learning about stock markets trading and you will start making money – this one does exist.

Thanks for reading this long article of 2,401 words.

Hope you remember that on May 12, 2016 I had written on my site and emailed you that very soon Nifty will hit 8000. My prediction came true in 14 days. Today Nifty closed at 8156.65 – in fact 8000 was achieved a couple of days back.

Let me tell you that there was no Technical Analysis involved, in fact I am NOT a TA. It was based on pure experience and logic that whatever falls will go up one day especially if its a good stock or Index. Its obvious that when Nifty is falling some of the great stocks are being sold at very attractive prices and people will rush with money when they see valuations of great stocks going down. This will lead to the rise of Nifty. So I saw an opportunity to make money.

What trade did I do? Simplest trade in the world when I have an idea of the direction of markets:

See this image please note that profits will increase more today:

ICICI Nifty Index Direct Fund – Results may vary at different times

Since yesterday’s close the profit is Rs. 28,068.15 I think it will cross Rs. 30,000 today as Nifty closed 1.08% up. I have now shifted this fund to a liquid fund so that I keep this profit forever. Note that I started SIP in this fund from November 2015 from the time Nifty started falling. I knew that Nifty cannot keep falling forever, it will go up some day and I can book profits. Reason of my thinking is given earlier. Total return is 13.62% in few months – what more can I ask for? I am very happy.

Update 28-May-2016: After the yesterday’s NAV adjustment the profits are now Rs. 33,220.20 – so this is the final profit that will be shifted to the liquid fund. Note that the expense is also in this and there is ZERO exit load so all the thirty three thousand plus profits will be booked and shifted to liquid fund. See the image below:

ICICI Nifty Index Direct Fund 28-May-2016 – Results may differ at a different time

Note that the annualized return has increased to 16.12%. So this converts to 16.12/6 = 2.68% return a month since the last 6 months.

What are the benefits of these kinds of risk-less and greed-less trading?

1. There is absolutely ZERO stress: I traded with the money I did not need for next 5-6 months as I knew it might take that much time to rise once again. Though as you can see it took exactly 6 months. 13.62% return in 6 months converts to 2.27% every month. (After the final day returns the annualized return has increased to 16.12%. So this converts to 16.12/6 = 2.68% return a month.) Note that SIP was automated. My only work involved was to take a decision and decide how much money I wanted to invest in this fund. Rest the system took care. Note that there is no Exit Load in ICICI Prudential Nifty Index Fund – Direct Plan. Expense is also very small at 0.56%. So basically they will shift almost all profits and money to the liquid fund today after new NAV is adjusted as per today’s profits.

2. No hard work is required: Read point 1 above as you can see I worked for just half an hour in November 2015, to take a decision if I will do this or not. Once my brain said yes, I logged in to my ICICI Mutual Fund account and made the system work to do the job. A half an hour job resulted in 16.12% profit in 6 months. Remember that last full month I was sick – met with an accident and was serious for 15 days in hospital. So basically I did nothing but still made a return of 2.68% that month. In fact I did nothing with this investment for last 6 months yet clocked 16.12% return. So absolutely zero hard work.

3. Risk is very less: I am not saying that risk is not there. Nifty still could have been today at 7500 and the fund would have been in a small loss but we all know that Nifty is not going to go on in one direction forever. Somewhere down the line the stocks will look very attractive and people will start buying them. Nifty will then rise. Exactly the same happened. Look at the stock prices now and compare them to when Nifty was at around 7200.

4. Sticking to basics: Remember the most popular phrase by Warren Buffet the best stock investor of all times – “Buy when everyone is selling, and sell when everyone is buying“. I follow this rule in investing even today. So I was buying when all Future traders and stock owners were pressing the sell button. Some of the Future traders would have lost a fortune when they pressed the sell button a few days back and Nifty jumped 5-6% in few days. And now when they are pressing the buy button I have sold my profits. Can you see how easy it is? It needs some patience though. Greedy traders will never get attracted by this great and easy trade because they want to make too much money too fast and in reality they lose too much money too fast. And some want to trade everyday for fun and it costs them a lot – they still do not learn. I trade only when I see an opportunity else I do not trade.

5. Risk management: This money was shifted from a liquid fund to the index fund once in a week since the last 6 months. As you can see I did not let greed or speculations take over me and shifted all 4.5 lakhs in one day to try to show off myself that see how smart I am in trading. In fact I knew no one knows till where Nifty will fall. Therefore I let the system decide that it keeps investing every week and I get to the lowest level as well and average my investments in the best possible way. Which the system did because it does not have greedy brains. Now obviously the investments have been stopped and the profits shifted back to liquid fund. Note that this profit would have come in almost 2 years had I not taken that decision to invest in this fund. 2 years profit came in 6 months, that too without any work. What more do I need? But greedy traders will try to make this profit in one month the result is obvious – they lose money.

Be patient with your investments and take very conservative decisions.

Ask any conservative trader I bet they are all making at least 20% return a year with no difficulty and stress at all. Ask any aggressive trader – most will come out with lakhs of losses in couple of years. Now you chose what you want to be.

I am very conservative trader whether its options trading, stocks buying or mutual fund investing. In fact me and my wife are very conservative in life as well. We do not buy costly items to show off even though we can afford, as frankly no one cares if you show off. Tell me how many of people make more friends who have mobile phones worth Rs. 50,000? Do you think they buy mobile phone worth 50k for some extra features. NO. They just buy it to show off to their friends and they do not know that their friends do not increase respect or love for them just because they have bought a costly phone. They do not realize that their life remains same and they become poorer by 50,000 rupees. On top of that a person who bought a mobile phone worth 50,000 is always worried about his phone. What if it gets stolen or falls and break? So basically he wasted 50,000 and bought more worries. So what was the benefit? NOTHING. Live in real life and you will always be happy.

My Conservative Option Course will help you become a conservative trader. Here are some testimonials. And here is where you can pay online.

Today I received a very good testimonial by an expert Technical Analyst. Here is the screen shot:

Michael Testimonial 25-May-2016 – Results may vary for users – Click on the image to enlarge

If you cannot read from the image here is the text of the email:

Hi Dilip,

Just wanted to let you know that the position mentioned in my previous mail, finally went in to profit (right on futures after a few days, plus also had the benefit of time decay on sold options). What I liked about this trade is, even though I was initially in loss, I did not have to bother much as the position is properly hedged. In this particular trade, I exit with around 1.7% profit. In fact, as I am writing this mail, the market is shooting up in the futures direction, after I exit the trade with small profit. But considering tomorrow is expiry, did not want to take chances. And most importantly, I do not have the “should have” attitude.

Overall, in a margin of 55k, I took 2 trades within a period of 10 days and my overall profit is around 5%. I know the directional trade could have made much more, but considering the market is highly range bound for the past few weeks, this seems good enough for now.

Having been in the markets for several years and spanning through a lot of Technical Analysis, the only thing which I was unable to learn is proper control over emotions / risk management, due to the fear of losing money. Burnt money on intraday trading. However, after learning about the directional strategy, I know that all my TA knowledge can be used but this time without any fear/worry/emotions.

Thanks for sharing your strategy with others !

By the way, I appreciate not only your conservative approach towards trading but also towards life. Read your last post “Why Traders Buy Calls and Puts and Lose Money” 🙂

Thanks,
Mike

Some important points to note from the email:

1. Technical Analyst losses fear of trading because the trades are properly hedged. So if you are TA my course will give you confidence of trading and you can start trading without fear. Note that even if you are NOT a Technical Analyst you will still trade without fear because your trades will be properly hedged.

2. 5% profit in 10 days in the directional strategy. Though results may differ for everyone the point is this strategy will immensely help if you are an experienced trader especially if you trade Futures.

3. Margin blocked will be only Rs. 55,000/- to take one lot trade.

4. The strategies will help you to have control over emotions like greed and fear and you will by default do proper risk management while trading because the hedges will manage your risks.

So three main basics of trading gets covered:

a) Control over Greed,
b) Control over Fear, and
c) Proper Risk Management.

Now tell me if all the above conditions are met why will you not become a successful trader after doing my course? So please do my course not just for the 5 strategies it has, but more for the knowledge of hedging you will learn in the course.

Remember that investment in knowledge gives the best returns.

Do not delay your decision especially if you are losing money trading. Do the course today else by the time you enroll you may lose ten times the cost of the course just by trading.

Here are the details of the Conservative Options and Futures Trading Course:
http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

Here are some more testimonials:
http://www.theoptioncourse.com/what-people-say-just-after-taking-my-course/

Here is where you will find fee details and payment options. You can pay by credit card or by NEFT:
http://www.theoptioncourse.com/bank-details/

Note that to do the course you do not have to go anywhere. You can do it from your home. Strategy 1 can be traded the very next day you get the course materials. Just two Strategy 1 trades will recover the cost of the course making the course free and my support for 1 year also free. What more do you want?

You can also contact me here.

Thanks For Reading.

These are very kind of emails that I receive almost every day:

Email received on 18-03-2016

Here is the text of the email:

Dilip,

Need your advice. Could you help me?

Before I became your subscribed member, I made the following mistake:

NIFTY 31st March Series:

Bought Put Option 7450 @ Rs. 148.80.

Bought Call Option 7800 @ Rs. 24.40 2 lots.

Today the Put Premium is Rs. 35.85.

and Call premium is Rs 7.80.

So my total loss ( 148.80-35.85) X 75 + ( 24.40-7.80) X 150= Rs 112.95X75 +16.6X150
= Rs 8,472+2,490
= Rs 10,962

Yes I made idiotic decisions for which I repent. it’s my idiocy.

Now as an advisor could you tell me any strategy to mitigate this loss?

Looking forward.

First let’s get into psychology of these kinds of traders why they love to buy calls and puts.

When most of us first learn about options on the Internet or in any book or by our brokers, we are told that “option buying is unlimited profit and option selling is unlimited loss.” As soon as we read it an idea comes into our minds (mostly to do with greed and easiness of trading).

This is the virtual dream that we start dreaming:
“Let me buy any Call and any Put – if Nifty goes down Put will make unlimited profits and if Nifty goes up Call will make unlimited profits. It is so easy. I will become very rich in couple of years.”

And then they press the button of a Call buy and Put buy the next day without using their brains and they feel happy that they have done a great trade. After a few days reality kicks in. Both calls and puts lose money. Then they see their virtual dream breaking and search the Internet in vain for help. They do not get any help and close their position in losses.

Wait the story doesn’t end here. They think they were unlucky so they try another time. And this time to recover the losses they buy 2 lots of both calls and puts. After a few days the story repeats. First loss was around 10,000 this time 10,000 more so total loss stands at 10000+20000 = Rs. 30,000/-.

Unfortunately the story continues for years and now the losses stands at lakhs. Then they either stop trading or start selling options. Unfortunately even after losing money in lakhs they do not understand that hedging your trades is very important. Just like a medical and a term insurance is important for all of us, hedging is like an insurance in option trading so its an important part of option traders life. This time in one or two trades they make a profit then one day a huge movement comes in.

Remember that selling options means losses are unlimited. But somehow they forget that or live in the hope that before expiry Nifty will reverse and they will end up in profits. It does not happen. So now this loss not only takes away their last two profits but they lose even more. Again the story continues. Then one day they realize losses standing at more than 5 lakhs.

Now they understand the reality – they are not good traders and need help. Here tip providers comes in. Welcome more losses. 🙂

Did you notice that most of us want to take the easy route to make money? Nobody wants to learn about stock markets but still think they think they can make money.

How is that possible tell me?

Trading Options and Futures in not an investment it is a business. If you are not willing to get knowledge someone with knowledge will take your money away. Also remember that in any business lazy people who look for making easy money never succeed in making money. So why do you treat stock markets as a different ball game? Stock markets also needs hard work and knowledge to succeed.

Do you think Warren Buffett made money easily in the stock markets? No. He used to visit the offices and factories of the companies he wanted to invest in. He used to even talk to managers of the companies he wanted to invest in. He used to calculate MOAT of the stocks to know the real valuations of the companies he wanted to to invest in. Only after some conditions were met he invested in only those companies those passed his test. How many of you do research on the companies that you invest in? Most of you invest out of pure speculations no research. Because research involves hard work and we do not want to work hard.

You may have heard and read it a thousand times but I will repeat it again.

To achieve Success there is NO substitute to Hard Work. Do not take short cut you will destroy your wealth.

If buying options and making money was very easy then imagine what kind of world we will be living in. No one will go to school. Because our fathers will be buying options calls and puts and making huge money and they will teach us the same when we turn 18 and give us 1 lakh, open a trading account and tell us the easiest way to make money. The whole world will collapse. No one will open a factory, no one will start a business, no one will become a scientist. So there won’t be any offices or jobs. The only work in the world will be buying options. So all will be option buyers. There won’t be any farmers too. So there won’t be any food to eat too. Even though we will be earning a lot we all will die of hunger. Do you think there can be a world where the only job people do is to buy options? And one more thing – if option buying only makes money then no one will sell options. If no one will sell options then trading will also stop. The whole world will collapse. God knows this and therefore makes sure that greedy and lazy traders lose money so that they get back to work.

People do not use their brains and think what I have written above, but just press the buy button because they only think about unlimited profits. No one thinks of the possibilities of losses. Only when they start losing they realize the fact that option buying cannot make money.

They also forget that options premiums are decided by five factors: Delta, Gamma, Theta, Vega & Rho and when they buy they are fighting against Theta (Time). Tell me in the history of this world who has won against time? No one so why and how do you think you will?

Ok some of you may have made money by buying options sometimes but how many of you got unlimited profits? Remember that unlimited profits are only in books. In reality you press the sell button much before unlimited profits kicks in. Because of the fear that the profits may again go away and turn into losses. So in real world buying options is only limited profit trade.

So unlimited profits is only in the books, not in real world. Long back I had written why option buyers lose money. Please read it for more information.

Once they realize that knowledge is important to make money trading options they enroll for my course. But unfortunately by that time lakhs are already lost and when they tell me their story I feel sorry.

By the way. I was also in the same shoes once upon a time. I did a lot of mistakes and lost about 7 lakhs in my first 3 trading years. 700000/36 = Rs. 19,445 lost on average every month for continuously 36 months. My salary at that time was just 25,000 per month. So basically I lost all my savings of years. I realized my mistake that I wanted to make easy money without gaining any knowledge so I lost. To this day I regret the losses but those losses changed my thinking.

I am today not only a very conservative trader but very conservative with my spending as well. I can easily live a more luxuries life, but to save money I am sacrificing them. To give you an example I can right now walk in a car dealers shop and buy a car worth 12 lakhs without taking a loan but I still use a car that’s less than 5 lakhs and 5 years old. So I save 12 lakhs. You know what whether a car is worth 12 lakhs or 4 lakhs, its only job is to take me from one place to another – so why should I spend more? Hope you get the point I now tell myself the real way the world works and do not dream a virtual world. Do you think if I buy a car worth 12 lakhs my business or life will improve? A BIG NO. So basically I will just waste 12 lakhs on NOTHING. Luckily I have a great and supporting wife too. She was and still is a very conservative shopper. We always see the newspapers for offers and discounts and never leave such shopping opportunities. I think because of this in one year we save thousands on shopping itself.

Obviously money saved is money made. We will teach our children the same. Believe me showing off your wealth to others is very costly and no one cares. Over the long run you only lose money showing off. Live a lifestyle below what you earn and I bet within years you would have saved a lot and it will make you very happy.

One more thing – after my accident I realized the importance of health. I realized that health is more important than wealth. What shit a life will be if you have crores in banks but you spend nights in hospitals. All that money will only be lying in the banks. So now I have decided to start exercising and eat very healthy food to remain healthy. Good health will allow me to work harder and create more wealth for my family.

If you are reading this and are still losing money trading options I highly recommend my course. Apart from the strategies it offers a lot of knowledge. You can even apply this knowledge in your own strategies as well or make your own strategies. You can pay for the course here. Remember that you can do this course from your home. It’s done through email only. I will support you for one year to become a better trader. Who in the world offers support for one year for less than 100 dollars? So do it now.

There are a lot of people who trade to have fun. Since life is very boring in their jobs or business the only thing that can give them some excitement is trading.

Read this email from one of my clients:

Testimonial by Uday May 2016

I am surprised that a strategy he paid for to learn and looks good him does not get his attention to trade because it takes 15 days to make money. Strange that people who do jobs get paid once a month. A trade that pays twice a month feels boring to him. Seems like people do not use the best gift by God to humans – their Brains. 🙂

How You Start Trading For Fun. This is how it happens:

1. You are approached by a stock broker to open an account with them. All they promise is amazing low brokerages and great tips. So you start dreaming a great and rich life and open an account with them. (Note: If you are paying money per lot for trading then please know that you are paying too much to your broker. Let me know your name, email and mobile number. I can help you save money trading. Contact me here.)

2. Once done you transfer cash in your demat or trading account to start trading. I think in India average amount transferred for the first time now is Rs. 50,000 to 1 lakh. A few years back it must be within 10,000 to 30,000.

3. The broker sees you have shifted funds. Now his time starts to make money. Note that your broker cannot make money from you if you do not trade. 100% brokerage goes to his bank account.

4. He gives you a call and advises you to buy xxx stock and guarantees that this stock might give 20-30% returns in 3-4 months. You say yes. He keeps the phone down before you can ask any question. He then buys the stock in your account.

5. You have fun watching the stock movement during office hours. After all you also opened the account and traded to have some entertainment during boring office hours.

6. After four months you see that the stock is still at same rate or down 20-30% instead of up. You then call your broker and he gives you some excuse like this happened or that happened which no one had an idea else the stock would have performed well. You think he is right.

7. He knows that if you trade again he will make money again. So he now advises you to exit from this stock and get into another stock which is looking promising.

8. You start dreaming again. In any case you were bored of seeing the same stock movement for months and you wanted a change to have some fun. So you say yes again. Broker keeps the phone down.

9. Within seconds he exits from that stock and buys the one he advised. Remember that these people never hit “Limit Orders” to get the best rates. They hit “Market Order” to save time and make sure that the trade gets executed. If you don’t know “Market Orders” gets executed at the worst rate going at that time. You buy the stock from the highest bid seller, and you sell the stock to the lowest bid buyer. Broker does not care.

10. An Advise: Do not let your broker trade. You must have a demat trading account where you can trade online. So you must trade your money yourself. If its not allowed to trade in office then trade from your mobile or during lunch go to the nearest Cyber cafe login and trade. All it will take is 5 minutes. Try to get the best rates by hitting “Limit Orders”.

11. Do not trade to have fun during office hours. Trade to make money and be happy even if you make 15% return a year. If you have friends in USA ask them the Fixed Deposit rates there. Its almost 1-2% a year. Why? Because inflation there is ZERO. In India inflation is around 7%. So if you are making 15% you are making 8% more than inflation. So your real return is 8% a year. Isn’t it much better than losing money trading but having fun? I think it’s much better to make money feeling bored, working hard and using our knowledge, rather than buying fun in stock markets.

So basically you must:

a) Get knowledge as much as possible on trading whatever you want to trade in stock markets.
b) Manage your own funds.
c) Trade yourself.
d) Know the risk you are taking and invest the amount of money in that trade which is reasonable. For example if the risk is very high, reduced the money involved in that trade. If the risk is low, increase the amount.
e) Do not listen to tips from your brokers as all they want is that you trade. They are least bothered whether you make money or not. All they want is that you trade so that they can make some money.

If you are a broker and reading this I am sorry but this article is saying what I have experienced from my first five brokers till now. I am sure many others too experience the same. Most of my initial trades were done because my brokers advised me. Not a single advise by them made money for me.

Conclusion:

1. Open trading or demat account to accumulate wealth over long time not to have fun during office hours.

2. Do not trade to have fun but trade to make money. Stick to trades that are making money for you even if that are boring.

3. Even if boring trades make money stick to it. With the profits go and buy some fun like watching movies or sports in a stadium.

4. Remember that even actors who sell us entertainment work hard and take their work very seriously to make a movie. When we pay for the movie tickets they get a part of it and they end up making crores. Then to celebrate success they organize a party and have fun. This comes in media and we get jealous seeing them enjoying life. What media does not show is when they work hard while making that entertainment for us. So why should we be jealous of successful people when they work harder than us?

Most of them are bored from their work, but they know if they start working on easy movies their market value will depreciate and they will be paid less. So they keep working for hours in great banners every day. We do not get to see that. Sportsmen or actors – those who keep working hard everyday keep rising the ladder of success and keep making more money year after year. Those who don’t are out from the money market. Their popularity and market value goes down. Why do you think some players and actors are paid more than others.

Learn from them.

4. Write down your goals in life and work to achieve it everyday. I bet that if you are honest and working hard, God will give you that goal before time.

5. Never be jealous of anyone in life just because they are happy and rich, because you do not know how much work they have done to achieve success. Ask them. They will give you free lessons to work hard to achieve goals. You will then actually thank them and appreciate them.

6. I admire successful people because I know they are different from others and are hard workers. If you are also successful in life due to hard work please share your story in the comments section or send me an email.

Thank You For Reading. Hope this article will motivate you to work hard even if its boring.

Note: If you are paying per lot in options please email me your name, email and mobile number. I can help you save money.

Please like my FaceBook page:
https://www.facebook.com/theoptioncourse/

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https://in.linkedin.com/in/dilip-shaw-48960b106

Option Course details (You can do this course from your home):
http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

How do you feel when you teach someone something and it makes them money?

Today morning when I got up and checked my email this is the first message I saw from one of my clients. See the time there – email written at 1.30 am in the night when we all were sleeping and this person was writing an email.

Here is the screen shot:

Results may vary for users

Here is the text:

Hi, I would like to thank you as I got 15 points in my first trade from your Strategy 1. It was my first profit after a long time. This is clearly my best investment, as I can see. The strategy is very good and you have explained it very clearly. Should I take strategy 1 again or wait? I would like to recommend your course to my fellow traders.

I would advise them, don’t waste time on intraday and tips providers, just think long term and do the course. You can show my testimonial mail.

The last message is very strong:

Don’t waste time on intraday and tips providers, just think long term and do the course.

Why people love to trade Intraday?

Here are the primary reasons:

1. It is fun and excitement the whole day watching stock going up and down.
2. They can give excuse to their family that they are working hard. (Really watching stocks is working hard? )
3. They want to make money everyday – but the fact is they lose money every day.
4. They do not want to take their positions to the next day or overnight as they think it’s too risky. They do not know that if they hedge their positions they can cover their risk overnight or even for a few days.
5. Intarday is an excuse to leave job and trade. But after few months they start looking for a job after losing money heavily trading Intraday.
6. They think it is better to say I made money today than saying I will make money after a few days. They forget that almost every day at 3.30 pm they say I lost money today.

Why people love taking tips or advisory services?

Here are the primary reasons:

1. These people providing tips or advisory service know more than, us so we will make money. WRONG ASSUMPTION.
2. It is easy to make money taking tips. Who wants to work hard anyway? Let me take tips and become rich. (Actually they become poor paying to tips providers and losing money trading their tips.)
3. It is fun to take tips and trade and watch stocks while the system makes money. In reality they are paying money to lose money.
4. They do not know what to trade so take tips.

Why people do not think long term?

Because no one has patience to be rich after a few years. Most traders want to become rich in 10 days or one month or one year. Nobody wants to wait for 5 years.

Do not forget that the best investor in the world took 25 years to become very rich trading stocks. He is none other than Warren Buffett.

So think about it. Do you still want to trade Intraday? Or want to think long term and make money for the rest of your life?

Remember it is always better to walk some distance everyday, and reach your milestone a few years down the line, rather try to run too fast and fall down after running a few meters.

If you think creating money over the long term is a good choice they do my conservative properly hedged options course. It has helped many traders since it started in 2014-15. It is impossible to upload all testimonials and thank you messages I receive everyday in my site. But this one was special so uploaded.

My last email to you was “What To Do If Sold Short Options Are Losing Money” on APRIL 19, 2016.

Here is the reason why the emails stopped:

I think some of you know that a few days later I met with an accident and was hospitalized for 15 days. Luckily by the Grace of God nothing major happened. And thanks to people who WhatsApped and emailed me for a fast recovery. 🙂

I may have replied to a few, not all. I am sorry if you sent me a message but I did not reply. Please understand that I was unconscious for 2 days and not well for next 13 days. Please accept my apologies for not responding. Thanks a lot for the messages.

I have also received many emails on why I have stopped sending emails. Well I hope you now know the reason. I do not have an employee to write emails – I write them myself. How can an unconscious hospitalized person write emails?

My apologies for also sending the course to a few people late as I did not touch my computer for 15 days. Now I have cleared them all. Emails will also start, but they will be less frequent until I become 100% healthy. Doctors have advised me rest for one month, but I am still working. So please be patient.

There are some 300 emails in the waiting list to be replied. I promise that I will clear them all in next 10 days. Please be patient if you have sent me an email and have not got my reply.

Good News:

When I was in hospital I had no idea what’s going on in the markets. When I got discharged I saw that in the last one month Nifty is on a bull run. I think 8000 is not very far. Nifty Bees is the best option to buy when Nifty is looking bullish. Do not buy Nifty Futures just because I think Nifty will move up. Nifty Bees is less risky than Futures – because they are like stocks, Futures are loans. Do not forget that Futures have an expiry and you have to be correct in direction before the expiry else you will lose money. Though 8000 is on the cards – how much time will it take is not known and cannot be predicted. So taking a calculated risk is better that taking a big risk. Those who buy mutual funds can also buy a good Index mutual fund.

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Nifty. An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Another Good News:

I hope you know that Supreme Court has dismissed petition of TRAI to fine telecom companies for call drops. This is a BIG news for telecom companies and I think they will be bought by many traders. Select 2-3 good companies and start investing in them.

Do not buy in bulk – try buying a few shares every month.

Bank Nifty:

Bank Nifty is also looking strong. You can try my directional strategy there.

INDIA VIX:

INDIA VIX is nearly 17 and it is good to trade Strategy 1 too. Remember that Nifty is looking strong so VIX should drop and make our strategy profitable fast. In fact it has already started dropping.

OK, enough for today. Thanks for reading.

If you want to know about my course its here:

http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

In this post you will learn that shorting naked (not-hedged) options will never bring profits and will always lead to losses.

I am getting to know from various sources that even traders who have done my course are shorting options naked, means selling without hedging.

When I wrote the email that VIX will start falling after the RBI results, some people thought that it is a great time to short options without hedge because in any case the VIX will fall and they can profit.

Well the whole essence of my course is that you learn how to hedge.

Whether you are a senior trader, experienced trader or new trader – naked selling of options is just not recommended.

If we can make money easily by shorting options, then why study in college and get a degree? Just ask your parents 2 lakh rupees and start selling options. Life is not that simple.

And imagine this – if we all start selling options and make money then who will ever buy options? Option trading itself will stop.

Please do not get me wrong, even in my course selling is required, but we hedge these options and hedge it pretty well. Buyers rarely make money, sellers do but sometimes the losses can be unlimited – to stop these unlimited losses hedging is required and in fact is a must.

Paid customers are now taking leverage of my newsletters where I tell them VIX will increase – they short sell options without hedge thinking when it drops they can benefit a lot.

Do not forget it is not just about the VIX – there are other factors that also determine the values of the options. Just because I say VIX will drop does not mean whatever options you sell will lose its premium, and you can make money, so the hedging is not required.

Other than Vega, options have delta, gamma, theta and prevailing interest rates that determines their premium. People keep forgetting that.

In fact a lot of retail option sellers in India never even cared about VIX, a lot of them do so now especially those who have done my course.

Nifty move of over 2-3% can damage a short option. And then traders call me asking for help. Well if you do not follow the rules in the course, how can I help?

Why Traders Short Option on High Vega?

When you short option on high Vega (VIX), you get a feeling that since you got a great premium nothing can go wrong. Well let me tell you that stock markets do not care. You have taken a risk and if the trade goes wrong, then remember that you are at unlimited risk. No matter what you do – some leave that trade till expiry on the hope that Nifty will reverse (worst case), some start selling puts against calls, or calls against puts, or some start buying Futures.

Well let me tell you whatever you do – when a short position without hedge has gone wrong, then it has gone wrong. No matter how hard you try, if luck does not favor, you have to take a loss. And while trading it is not a great idea to leave things to luck.

Trading short options is almost like trading in Futures, after a certain time – they start behaving like Futures. Delta becomes close to 1, and you start losing 1 point for every 1 point move of Nifty against the short option. Agreed losses can be less than a Future trade gone wrong – but remember that when Future traders are right they also get unlimited money. When you sell an option you only get a limited money.

Then there are some people who follow my newsletters like sheep. You have done the course and you must first follow the rules of the strategies.

If I send an email to close the position but if your stop loss is not hit or the profits have not been achieved then you should not close the position. If you follow anyone like a sheep when will you ever grow?

I send newsletters to my paid subscribers to make them a better trader – not to follow it blindly. Trades like Ravi make more because they also use their brains after doing my course.

If you do my course I will help you to become a better trader for 1 year – for as low as Rs.5000/-. Who will do this in the whole world? If you are willing to learn, I am wiling to help.

Here are a few things you can try if the short options have gone in the money – but keep in mind – why get into trouble when you can avoid this trouble? No one is forcing you to short options without hedge so please hedge and stop this way of making money trading.

What to do if short options have gone ITM (In the money)

In my experience Stop Loss is the best option. Exit as soon as the short option strike goes In The Money (ITM). So suppose you have sold 8000 strike CE. Just take a stop loss as soon as Nifty spot (not Futures) reaches 8000. No hope no calculations. You took a risk, it failed – now it’s time to stop the losses. Remember that Nifty may come down and the option you sold may expire worthless – but no one knows the future so it’s always better to stop the losses than taking a chance. Once you take the stop loss forget the trade – because back testing this is useless.

Some people love to back test my strategies. Now back test this:

Sell an option 200 or 300 or whatever points away from the first day of expiry and check from your Rs. 1 lakh or more back testing software what would have happened in the last one/two/twenty years had you:

a) Left it till expiry, or
b) Taken a stop loss once the stock hit the shorted option’s strike.

Now whatever the result – do you think Nifty will give the same result in the years to come? No way.

Now do you get why I do not believe in back testing?

A lot also depends on the back testing software. Not all back testing software is the same. Some people have back tested my strategies and found it to be great, some found it not so great. Why do the results differ? After all it was back testing the same strategies right? So the results should be same.

My point is forget both. You are in control when the trade is on, not that back testing software. What happened exactly one year back is not going to happen now. So when you do the course think about the future not what it could have done had you done the course a couple of years back or 100 years back. You cannot go back and change your life – so why bother?

In fact no one takes a stop loss, but they try the following strategies in vain to try to make money from a lost trade:

1. Rollover – Rollover is selling options of higher strike. This is the most popular choice among short option sellers. After a stop loss rolling over is not a bad idea but there must be a logic.

Most popular among trades is to sell 100 points out of money option once the short strike is hit. Nothing wrong with a rollover – but please remember that rollover is nothing but taking a loss in the current trade and opening another unlimited loss trade at a strike where you are not very comfortable. Forget the first trade, now ask yourself – if this is the trade you are comfortable trading? In 99% of the cases the answer is no. Rollover can be good option only if you took a limited loss and are willing to take a limited loss. It’s not good if you took a big loss and are again trying to take an unlimited loss.

With hedging since the loss is limited we can always stop our limited loss and again rollover with a limited loss trade. If there is no hedge and if both of the trades ends in losses – I can guarantee two losses can take away 6 months of profits or more. You will start again, thinking it won’t happen next time. More often than not, the next time it happens, you forget the previous losses and this time you end up giving more than your principal to the markets.

Then you get your salary, bring more cash to your trading account and the viscous circle continues – for years. No doubt why I get calls by traders who lost 10 lakhs almost every day. You are doing nothing but giving a part of your salary to the markets.

2. Selling the other side option – This is again a limited profit as against unlimited loss risk. So basically traders sell puts when their calls get in the money, or sell calls if the puts they sold gets in the money.

Selling options is limited profit. So if you do, the max profit you get is the cash received from the option sold. If Nifty keep rising all you get is the cash received from the other option. But what if Nifty reverses. Now you have another problem in hands. How to manage the losses in the other option you sold? In fact when the trade ends you will see that you had a loss in the original trade and the adjusted trade. You won’t believe but Nifty will reverse almost exactly from the same place where you decided to sell the other side of the option. You will feel like the biggest fool on earth.

3. Some traders buy some in the money (ITM) options, some buy Futures to protect losses. Fact is whatever you do it’s really hard to make a profit out of sold options gone into losses.

Instead of trying to save a situation where you are losing money, it is always better let go of your ego and stop further losses in the trade. Then wait for the next opportunity to trade.

The reason I love hedge is I know I am at a limited loss and I can just exit the trade at a limited loss whenever I want to. I do not want to trade in panic and will never trade in panic.

What tricks you did when you sold an option and it went into the money? I would love to know, please me know in the comments section.

Nifty is stable, India VIX above 17 and has increased more that 6% from previous close at 16.04. At the time of writing it had increased by 7.86%, it has dropped slightly now.

Some of you had booked profits in Strategy 1 after the RBI news helped VIX to drop significantly.

So today is a great day to enter Strategy 1 again.

We made a profit and since VIX is high we will make it again.

I do not think there is any real reason for the VIX to increase except the falling prices of crude oil.

It has tumbled 5% and it looks like the panic in commodity markets have spilled over into the equity markets as well. Otherwise there is no reason for the VIX to have increased so much today.

But isn’t this what we are looking for? VIX has increased and you can trade Strategy 1. It also helps that the trend is up – so there is a great chance that VIX may decrease in a few days. This is exactly what we want. Great opportunity.

For those who did not book profits:

If you did not book profits its highly suggested that you check your current trade.

If there is a small profit of even 2% – exit and book the profit.

And then enter into a new Strategy 1 today with 7900 as base.

If you are not making any profit, then wait till SL (stop loss) is hit as per the document. Stick to discipline. Trading profitably is possible only if you stick to discipline. Over a long time disciplined traders makes money. Non-disciplined ones perish.

If you do not know what is strategy 1 its a part of my paid course.