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.

We had back to back 2 volatile months and therefore some of you who have done my course may not have been able to make too much money. And it is perfectly ok, one or two months in a year can be very volatile and its accepted that the 3% target in a month cannot be met. These months teach us a lot. You may have seen that the losses are pretty small and manageable, and the best part is you do not worry about these losses as they cannot damage your portfolio.

We are traders and we have to live with it. Please remember that my strategies are not one day wonders, they are a life time wonders and you must have patience to keep trading them to make money, in fact a lot of money over a period of 8-10 years.

Now I bet a lot of volatility will be out of the markets and we will be back at doing what we do the best – keep making small profits every month. 🙂

On Tuesday, 5th of April 2016, RBI will announce its policy decision on repo rates. Bankers and markets are expecting a 25-50 basis points cut in Repo rate following the recent reduction in small saving rates by the government. I think RBI being very conservative, will cut repo rate by 25 points only.

Since this is already factored in by the markets (the recent rise of 400-500 points), there will not be much movement once the news is announced.

However VIX will fall for certain – that is for sure. And banking stocks will go up since they benefit the most whenever a rate cut is announced by RBI. Investors can collect banking stocks.

Now back to helping my paid subscribers.

Currently INDIA VIX is at 17.28 – a 4.22% increase over previous close. On Monday, 4th of April 2016, it will increase slightly or be stable.

But once the repo rate cut is announced at 11 am next day, VIX will fall sharply.

So what my paid subscribers can do?

If you have recently done my conservative option course trade the Strategy 1 on Monday at around 3 pm. Why 3 pm? Because if anything is left to factor things in, markets will do that by 3 pm. Also VIX will be at a high. We do not want to get caught in a momentum and I really do not think there will be much movement after the RBI policy is announced as 25 basis point cut is already expected.

So VIX will fall and you can make money fast.

On the other hand if a 50 basis point is cut, Nifty will move up – still VIX will fall and the trade can still be in profit. So whatever happens, you will profit.

If there is a 50 point cut – aggressive traders can trade the Strategy 2 directly on the PUT side. In that case Nifty may not fall for the next few days and the trade will be in profit. 4-5% on that trade can be easily made.

Do not trade the directional because too much movement is not expected and VIX will also fall – this is perfect for a non-directional trade rather a directional trade where we want VIX to increase and a huge move to come. It does not matter which way, the trade can still be in good profits, but right now hold on.

Range bound markets are best for conservative trading where you do not predict market direction, continue with your job and still make money. You must learn conservative trading if you are serious option trader. You can use the hedging methods described in the course to make your own option strategies and make money.

Update on 06-April-2016: INDIA VIX has started to fall. At 10.10 am while writing this it is at 17.66 or almost 1% below previous close.

Moreover Nifty also did not move much.

Though VIX is not falling the way we wanted it to, a slow fall also is not bad.

Premiums will evaporate in Options and Strategy 1 can be in profits in 10-12 days from the day it was initiated and this includes holidays.

Please keep an eye on the premiums though. Calculate once at around 10 am, then when you are having your lunch at around 2 pm.

In between continue with you job or business, forget that you are even trading. What’s the point in trading if you are trading with stress?

Learn to trade stress-free. Once you learn to trade stress free you will be happy in your life as well.

The aim of my course is to help you trade with confidence, peace of mind, and build a great portfolio for your future. Not to trade for fun and to lose money trading, trying to make a lot of money everyday.

It is not just about the strategies, there is a lot to learn in the course. You will be able to make your own strategies as well.

I want you to reach a level where you can make your own trades according to your risk profile and life style. My support will always be there.

You can pay for the course here.

Thank You.

I do not run away from the fact that my strategies can lose money. Till now in this month we are in red. But we will see what can be done to get back our money and overall what may happen to our portfolio if we keep trading conservative strategies.

On the other hand some of the experienced trades who have done my course, must have traded the directional strategy and made good profits. Unfortunately not many inform me. Please let me know (via email) if you traded and made money.

Nifty from 7000 to almost 7700 in 21 days. 10% in 20 days is considered fast and not normal. This is NOT usual and Nifty cannot rise or fall 10% in 20 days more than 5 times in a year. Keep this in mind while reading this post. This is where our strategies will have issue but most of the time Nifty goes nowhere and we keep making money. 🙂

Had VIX fallen more our strategy 1 could have been in profits. Until RBI policy is not out VIX will hover around 16-18 range, then fall to 14-16 range.

But its OK we only suffered a 10-12 point loss which is manageable.

Now lets see what happens to naked traders in these kind of situations

(Naked traders are traders who do not hedge their positions and try to make as much as possible)

Traders who were short when Nifty was at 7000, lost huge money. For option traders all puts bought at 7000 or 6900 is worth almost ZERO now. So all money gone. If you had done that trade please take back whatever is left, because it is now guaranteed these options will expire worthless. Do not wait for some magic to happen. Magics do not happen in stock markets in few days. Magic does happen over the years though.

Traders who were long made money – BUT how many went long at 7000 and booked profit now at 7700? I do not think even a single trader out there would have taken this odd 700 points. IMPOSSIBLE.

EXACTLY Above is the life of a naked trader. Take huge losses but, when its time for profits take 20-30 points profit and out. Overall they are losers – BIG LOSERS. Be happy for a short term – live a miserable life for the long term.

Forget profits – they bring money to their account to gift it to smart traders and their brokers. 🙂

Ok so what about our conservative strategy?

Yes those who were on Strategy 1 would have also lost. Question is how much? 10-12 points that is it. Manageable? Very much. Because we know our next trade may make more than that.

So basically assuming we lose 5 trades in a year – we lose a maximum of 50-60 points in a year. But for the rest of the times there are going to be profits. 2-3% in every trade and some 20-24 trades in a year – do your own calculations. And do not forget the Strategy 2 which helps to get our money back.

So what can you do now if Strategy 1 hits stop loss – or will hit stop loss today?

India VIX currently around 16.33.

This will surly drop once the RBI interest rate policy is announced next month. So I would suggest do the following:

1. If SL hit, exit and then wait and watch the markets till the RBI news is out. Trade the same day (Strategy 1) just before the news (1-2 hour the best) or trade 1 day before. VIX will be very high – small movement cannot damage our strategy. Once the news is out falling VIX will help us tremendously.
2. Go to strategy 2 today itself, but DO NOT double the no of lots. If not hit you get back the money lost in few days only. Remember that its only 10-12 points we need back so do not get too aggressive. Be realistic.
3. Shift the Strategy 1 to safer position with 7700 as base – we want to be safe on the call side. Nifty may go up further.

I hope this will help.

Thanks Everyone for very nice comments on my last post on “People Hate Free Advice Even By Experts On Stock Markets“.

Please understand that I will keep writing on Options and share whatever little knowledge I have on options on this blog with you. The only thing as you can see in this newsletter is that I will not directly tell you which option to buy or sell. I will try to help my paid subscribers more henceforth. But since they are less than 1% of my newsletter subscribers – I cannot totally ignore the ones who have not paid. I love writing about options strategies and I will keep writing.

If you trade options then it is very important you know proper hedging methods. You will never make money trading naked futures or options. You may not know but the institutional investors NEVER trade naked options – they use options to hedge their portfolio worth crores. And if they ever want to make money through options then they ALWAYS hedge it with other option.

You can also learn some great hedging methods in my course.

Learn Proper Hedging Methods In My Conservative Course:
http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/

Testimonials are here:
http://www.theoptioncourse.com/what-traders-say-about-this-course/

I have been explaining for long why I do not offer my course for free, because people do not give value to anything free. This post will prove the point. This is an interesting post, nothing to do with options but human psychology. Please read and let me know what you think. There is something I have decided which you will know in the end.

Even before I started this blog, I acquired good knowledge of finance, money management, investing, stock markets etc. So whenever my friends talked about their financial advisers/bank managers giving them investing advice – I used to give them free advice – usually telling them not to go by their advice. I do not like advice from these people as most sell ULIP (Unit Linked Insurance Plans – A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan) to generate commissions. Customers make almost nil returns when these plans mature, while the agents/employees make hefty commissions. Customers realize only when these products mature. Most do not even pay the full term and close the plan in 3-4 years making huge losses.

Unfortunately they used to confront me asking how come I know more than them, and invested in what their financial advisers sold them. So I have stopped advising my friends. Even if they ask for advice, I tell them to do what they think is the best for them, because deep down I know they will not listen to me.

When I started this blog in 2014 unknown people started asking me questions, of course stock markets in general and options in particular. At that time the site did not have my contact number, only the contact us form. Initially it was a couple of emails a day, but as the traffic grew, emails grew to 20-25 a day. I used to spend some 3-5 hours daily helping people for free. I was very happy doing it. I thought this time the pattern will differ, people will listen to me, but no Sir I was wrong. These people started sending me their own trades and “victories” in one or two trades. I did not receive a single thanks email in those 4-5 months of helping people for free. In fact I got back questions on my answers like – “why you think so?”, “what if this happens – so I am not heeding to your advice”, and when I used to give them good hedging advice I got answers like, “this will reduce my profits I don’t like it.”

I was started to getting frustrated when one day when my wife told me I was just wasting my time, I realized I really was. I therefore started a paid conservative option course.

What I found that when you advice for free, the pattern of response remains same. Friends or unknown people, no one appreciates free advice even if it comes from an expert.

However I kept giving free advice occasionally on my site to my subscribers. But recently something strange happened. Whenever I send emails to my 7000+ email subscribers (email subscribers only, not paid customers) a couple of them unsubscribe. That’s OK, this is quite natural. But on 15th March 2016 more than 15 unsubscribed. This was my last email to book profit on 7000 PE sold that I advised to sell on 8th Mar 2016.

See this – I deleted a few emails could be around 5, as I thought it to be normal but then this happened:

15 unsubscribed in a single day – I was shocked. I mean here I am doing research like a fool, trying to help you to make money just because you subscribed to my site and told you an almost guaranteed trade to make money without taking a single paise from any one, and when I asked to booked profits you get annoyed. Strange.

Some in fact thought I am cheating people. See this:

Basically he does not believe I sent an email on 8th. The email would have gone into SPAM folder, or he may not have opened it – is that my fault? So thought may be this person subscribed after 8th so I politely asked him the subscription date. His answer – if you do not remember then do not send email. Am I suppose to remember when 7000 people subscribed to receive my newsletters? How is that possible? Ok I could have seen it in my system but I thought he could be a recent subscriber so asked just to know what happened. But I got this strange reply. 🙁

One person thought this to be a joke.

🙁 🙁 Joke??? Really???

I have given free advice on my site a lot of times:

ICICI Bank book profits 11.32% rerun in 35 days.
10% in 45 days.
India VIX Dropped book profits
How to trade the Budget Day 2016/
6800 bottom for Nifty and other ideas to trade
Puts Costly than Calls, Arbitrage Opportunity
Long Strangle book your profits
Book profits in Put Credit Spread/

And many more. Had people taken them seriously they would have made good profits. But did they?

After so many free advice I got only one response here:

Puts costly than Calls, Arbitrage Opportunity. See the comment there someone made 1016 bucks:

Could be 2 more people who did not bother to inform me. So out of thousands of subscribers only 3-4 actually made money off these free advice. The rest never bothered with free advice. Which proves free advice is useless.

One of my advice failed though:

http://www.theoptioncourse.com/buy-axis-bank-trade-the-directional-strategy/

This was buy Axis bank at 484. It is currently around 430. But frankly I doubt anyone invested, and if someone actually did they can hold their investments. After all its a good company like Axis bank and you are sure to make a profit – its just matter of time.

Looks like someone was waiting for something I said to fail. So I got a WhatsApp message a few days later when Axis bank stock fell 10% from that level – “someone with too much ego fails – what happened to your Axis bank”?

That message is deleted. I felt very embarrassed and was like scratching my head. I told him politely that I am no super computer and I can fail – this is part of our life and you are free to take my advice – after all its free. He then messaged me – “then do not advise”.

One failure out of so many and you get scolded. 🙂

A few days back I got an email from a retired 60+ doctor. At the age of 60+ he involves in dangerous aggressive trading – selling naked puts. He was in huge losses. I thought I should help him and ask him to stop this aggressive trading as this can destroy his wealth that he made through years of savings. I also wanted him to do my option course as it is best suited to retired people – at least the conservative strategies. It is properly hedged, returns beat inflation by far, it makes passive income plus it gives time to enjoy life without too much stress thinking about the stock markets. In due course of time lots of emails got exchanged between us. Neither he listened to my advice, nor he did my course.

He wasted his time, I wasted mine. 🙁

When I emailed him after a few days telling him that he forgot me after the help, he replied by saying he did not forget, but he learned a lesson from the loss. Do not know what lesson he learned, but at the age of 60 you do not have time to learn lessons or do experiments with stock markets. Suppose he learns the perfect strategy by the time he is 65, where is the time to get the lost money back plus make a profit? It is strange he is not wiling to pay just 5000 for the course and learn a few conservative strategies. He is rather willing to lose lakhs of money and time trying to do things on his own. This at the age of 60. Strange.

Whatever happened, I felt like a fool. 🙂

See his email:

I have come to the conclusion that Free Advice is NOT respected or given value and none of my subscribers is trading them, so basically I am wasting my time.

Therefore hence:

“I will NEVER publish any Free Advice to Buy/Sell a Stock, Option or Future.”

I may trade myself and make money, but never write in this site. I will also not offer free advice to anyone by emails.

Henceforth, my full attention will be my paid subscribers of the course.

And therefore all my future newsletters will ensure my paid subscribers get help to trade my strategies better. This includes when to trade my strategies and VIX related newsletters.

Of course I will keep writing articles on stock markets, options and futures, but I will NEVER directly endorse buying or selling a stock or option.

On all of the above free strategies, had I charged you even Rs. 1000/- you would have taken it very seriously, given it value and actually traded and made a profit. You would be happy and I would be happy too.

A lot of people make fake stories of losses and email me to send them the strategies for free to help them recover lost money. Emotional blackmail. Of course I ask them politely to pay so that they give it value. I hope all those people now understand why did not send them the strategies for free.

If you are thinking of doing my course you should pay to get the course otherwise you will never give a serious thought to it and you will not have the motivation to seriously trade them. If you do not pay the fees you will never have any respect for it and it will just by lying in your inbox just like all other dead emails.

Hundreds of customers testimonials. 80% success rate, 3% a month looks like joke when some people make lakhs per day. (Yes Ravi still doing great. I will share his latest email later this month.) Stress free trading. 5000 is not a big deal and my service for 1 year makes this a no brainier.

So please do not keep waiting for free tips, when you will get it, you will not value it. Learn to pay, buy the course today.

Disclaimer: I have never thought myself as an expert of stock markets. I consider myself a very conservative and hard working trader that is it. The topic of the post is to help you understand the basis of the post, because a lot of people think I am guru or expert but still do not give value to my free advice – that is why “expert” word is used in the topic of this post. When I started trading I was even worse than you. Knowledge changed me completely.

The idea to write this article came from a single comment from someone very educated, experienced and a senior person.

Of course I will not give the link to that article to hide the identity of that person. It is more about how most of us think – the collective human mindset (especially Indians) and not about that one person. Please also note that this is not a political post. It is rather my point of view on blaming someone else for our own misfortunes in stock markets or in life.

Recently someone told me that people in India do not invest in good companies shares, instead they get their hands burned by investing in blade companies like Saradha Chit funds, Rose Valley Scam, Pearls Ponzi Scheme, Agri Gold Scam, Sahara etc. So the government should launch some kind of Personal Finance Education. When will our rulers wake up to the reality and do the needful, he asked.

In the hindsight, he is actually blaming the government for the losses faced by some of the investors who lost money investing in such scam companies.

The point is should we blame the government for losses we face in the stock markets? If yes then shouldn’t we also give credit to the government when we make profits? (I mean credit which is like a Thanks not Income tax).

You know why people invest in such companies? It is out of greed, nothing else. Their greed of making more in less time is the root of this evil which I think they deserve. Forget stock investing – how many of you speculate options and try to double your money in every trade. If you are the one ask yourself – since how long you have been doing this? 1 year, 2 years, 3, 10? There is 99% chance that you lost money all these years. If you were not successful for these many years what are the chances you will be in the years to come? NIL.

Now compare the above two. BOTH ARE SAME. One person is not very educated – invested in Ponzi schemes due to ignorance and greed and lost money. Another well educated but buy options on pure speculations and loses money continuously. An instrument which is not meant for gambling is being used for gambling. Both are sides of the same coin – they cannot control greed.

Is it government’s job to teach you to control greed? No, it has to run a country. If you are greedy, government is least bothered. And the educate investors initiative by the government is already there. We see so many advertisements in trains, bus stops, stations and other public places to invest carefully. But we ignore, don’t read, don’t even care and end up investing in a bad company and lose money. How can the government be blamed for that?

When financial institutions have investment educational campaigns, we attend, make notes, come out and are back to what we are best at – speculate and lose money. Tell me what can government do now?

Launch hundreds of campaigns, but still people will keep doing these mistakes out of greed again and again. We should not blame some other entity for the failures in our lives. If we cannot control greed we are only welcoming misfortunes in our lives – and they won’t stop until you stop being greedy.

If someone really want to get education in investing then there are a lot of things available online for free. They do not read that. Then there are magazines, online journals, forums, webinars, seminars, news channels, discussions on TV by experts etc. Still you want the government to start teaching. What difference will it make if they start another investor education initiative. Hundreds are already there but you don’t care.

Here are some of them:

SEBI Investor Awareness Website:
http://investor.sebi.gov.in/

Here is financial literacy for school children (gift it to your kids today if they are young enough to understand finances):

http://www.sebi.gov.in/cms/sebi_data/investors/financial_literacy/Financial%20Education%20for%20School%20Children.pdf

And a lot more are already there. If you have the desire to learn something no one can stop you.

Ok lets take example of some great investors of our times. Did the Government of USA teach Warren Buffett stock markets investing or did the Government of India teach Rakesh Jhunjhunwala stock investing? Its your money and you will have to work hard to acquire knowledge and help it grow. If you don’t want to work hard or cannot control your greed, then please do not blame the government. And this applies to everything in our life.

Some people blame their luck. When the trade goes wrong – they will say it was my bad luck – next time it will not happen. Well next time the result is the same – bad luck.

Why leave your trades to luck? Its better to buy a lottery than trying to buy options and make money. Option buying is pure speculation, it will never make you money.

We have a tendency to blame others for our failures. Luck, government, brokers, sometimes even Gods – but deep inside we know we did this mistake – blaming someone else will only take the pain out of us temporally – but the damage has been done – blaming will not get your cash back. Its gone.

Blaming others gives us a “virtual” excuse to escape from reality. Try and if you fail just blame your luck and move on. But does that solve the problem in your life? NO. It still exists.

You could not succeed and no one has any role to play. You can blame anyone but the truth remains – YOU FAILED – and that truth will not die by blaming others.

There are a lot of issues in our lives – not getting promotion in a job, office politics, salary not increasing, price rise, investing in a bad company, trading losses, issues in the family – there are hundreds of issues in our lives. Blaming luck will not solve the problems – facing the problems will.

Let that office politics go on, you do your job. Ultimately you will be rewarded. Over the long run reality comes out. If salary is not increasing then get more knowledge, acquire more skills and get a better paying job. There are a lot of ways of making your life better, blaming others is not a way.

I think we all read about basics of stock markets in school – from there we have to do research and educate ourselves. Government did its job – now its your turn to work hard.

I have seen that we Indians love to blame our leaders or luck for everything. I think its an easy way out to give yourself an excuse for failures. After my losses if I kept blaming my luck, or, if I waited for that “subsidized course on stock market investing” by the government, then I would be living a wasted life now.

But I took my life in my own hands – sat in the drivers seat and rode the path I wanted to travel.

I read about stock markets at least 5 hours a day, everyday, for about one year while having a full time job which had nothing to do with stock markets. You know how much is that? 5*365 = 1825 hours or 76 days or 2 and a half months of continuous reading without sleeping.

And the results is there for all of you to see. I transformed from a negative person living a life on loans to debt free full of energy positive guy. This website that you are currently reading is probably the best website in India teaching options for free to at least 350 people daily. Thousands read my newsletters and email me to write if three days passes without an email. This site is in fact ranking better in search engines than many big websites launched years back. To top it all my option trading course has been bought by Technical Analysts, MBAs from renowned universities in foreign countries and in India, CAs, Brokers, Government Officers, Investment Advisers (some much senior to me), Retired people, IIT professors and top executives holding high positions in big name companies. All this I was able to achieve single-handily in just a few years.

When I lost 7 lakhs trading stock markets – like most others I would have easily gone the “blame luck for your misfortunes” path and would be living a life full of miseries by now. But I faced it – without blaming anyone except myself and tirelessly worked hard, day in and out to achieve what I wanted to achieve in life and got it – much before time. I still work some 12 hours a day – I can get lazy – but I know if I get lazy then whatever I have done till now will get destroyed. I won’t let that happen.

The point of this post is – if you have issues in life – do not blame anyone for that. It will only get more complicated. Face it and stop it right now before it gets out of control. Learn to work hard, get knowledge, and improve your life day by day.

There are a lot of people who think they are too old to learn anything. Hey dude you may be 40 or 50, but if you give up learning now then for sure you will live a mediocre life for the rest of your life.

So start learning about investing as much as possible. If you are option trader then learn to trade properly first. If you do not want to do my course, its OK do some other but a good course or read books, but please stop speculating. Trading without knowledge is very dangerous – you will never make money.

The more you learn the better trader you become, and for some strange reason, you also become a better person.

Disclaimer: This post is not to show off about me or my achievements – it is more about trying to teach you that education and hard work can bring magical returns to your life, blaming others wont help.

Thank You for reading this long post.

We will discuss about the Highest Open Interest at 7000 PE and why its a great option to sell, but first some news on Nifty.

Nifty Is Back To Normal Behavior

Last few days were bad for option sellers. Even though the call options did not explode as expected (in fact they are trading at a discount compared to puts) – the put options did not go down in value the way it usually happens whenever there is a rally, and to rub salt into the wound Nifty rallied and how.

From 7000 to almost 7500 in matter of days

Naked option sellers may have lost at least three months of income. They will start selling again to “recover” lost money and in another 3-4 months again a tide will come and wipe away their entire profits. They will start selling options again to “recover” lost money … and the story will NEVER end in their entire life. 🙂

If you have done my course, this is a great time to learn what kinds of losses you can expect. This rally was that which falls under the 20% of the times when our trade loses small money. As you can see its very small compared to what you used to lose prior to doing the course.

Now everything looks fine, and we will start making profits again. We take small steps forward, a lot of them, and after a few months one small step back. Overall in a year we are in profit and that is what counts in the end.

If you have still not done my course its highly recommend you do it now. Do not waste your time and money selling naked options.

Always keep some extra cash to buy quality stocks when there is a crash

If you have cash there is no better time than buying your favorite stock when the markets crashes. This is the time when I don’t mind investing some extra money buying some great stocks. As per my risk management rules since I have spent extra last two months buying stocks, I may not bring in any money next two months to create a balance. In the end, I am still only investing what I am comfortable with investing in the stock markets. This is risk management – buy more when there is an opportunity – buy less when you speculate – but average out your investments over the year. Do not invest more than you are comfortable with.

Hey that was a very important lesson in risk management. Did you learn anything? I hope you did and henceforth will be more disciplined in your approach to money-management.

Of course I have a time horizon and most of you know that when I invest in stocks I look for 10-12% return in a year. (Well we can make more – I have discussed below). When you make that profit – get out and deposit that cash back into your bank – or increase your investing capital next year. Yes no doubt sometimes I exit in a loss in some stocks. But overall this method of regular investments (more when there is crash) has worked out very well.

Frankly there is nothing special about it – I just follow the basics of investments that is it. Most of you get swayed by emotions – I don’t. 🙂

This the reason you must have some extra cash to buy your favorite stocks whenever markets crashes.

Here is how you can make more than 10% a year

Once you buy, ask collateral against shares from your broker and trade. If you are trading well this will have a great effect.

One – you make money from the stock when it rises and,
Two – you make money from the options too. What more do you want?

Disclaimer: Here is one trade that you can do tomorrow but please trade with proper research and risk management. Please understand I do not get paid by giving these free advice so the risk in the following trade is entirely yours. I have given reasons why I think this could be a successful trade. Though most of my predictions come true, you must understand stock markets investments are subject to market risks and my advice may go wrong. So please trade after doing proper research.

Highest Open Interest

Highest Open Interest is at 7,000.00 PE both for March and April 16. Though I do not care much about open interest – this time opportunity looks very attractive.

You can see highest open interest here:

http://www.moneycontrol.com/stocks/fno/marketstats/options/high_oi/index.php

What you can trade?

Those who have done my course if you have free cash you can sell 7000 PE current or next month and hedge it with the way its written in strategy 2 of the course. You know where to take a stop loss.

Those who have not done my course sell 7000 PE at your own risk. I highly recommend hedging it with some other strike option. Since this email goes to all who have taken my course and also to who have not, I cannot reveal which strike is the best to hedge. If you like to learn do my course now.

Now here are some reasons for the 7000 PE sell:

1. Though not a big indicator or any assurances – Highest open interest lies at 7000 PE in both months. So markets expecting Nifty Not to fall below 7000 at least for the near term. And probability looks very high.

2. INDIA VIX is currently at 18.46 and is falling slowly. There is no reason for it to rise. 18.46 is good Vega to sell. VIX is not falling sharply due to the RBI news expectations next month.

3. Nifty had a great rally and is now looking stable and bullish. There is an expectation that RBI will once again ease interest rates during its policy meet next month. This expectation will ensure less fall for Nifty. Means speculators will buy stocks in expectations that it will give them profit if RBI actually eases rates – and this will stop huge fall for Nifty – which is exactly we want.

4. Nifty is still looking bullish and usually a trend does not reverse for no reason. There has to be strong reason for a trend-reversal. Right now I cannot see a strong reason. RBI policy is next month and if Nifty does not fall 7000 PE will lose its value this month itself. Current month will expire worthless and next month will lose a lot of its premium.

5. Why fear when you have bought protection? Calculated risks needs to be taken when probability looks high.

Lot size comes under risk management and it is up to you to decide how much risk you are willing to take.

Warning: If you trade naked options (whether you buy or sell it does not matter), its highly recommended that you learn how to trade conservatively. Aggressive trading makes more but losses double. Result is that your trading capital makes losses year after year. This is not why you are trading for. You are not trading to lose, you are trading to make money. If you can lose money slowly why you have a problem if you make money slowly? Think which is an better option – losing money slowly or making money slowly.

If you think making money slowly is a better option learn to trade conservatively today.

Update on 15-Mar-2016:

Book profit on 7000 PE sold on 8-Mar-16.

See this on 8th March 2016 it was going at around 26-24:

Today on 15th March 2016 it is currently below 10:

That is a profit of 16 points in 7 days or 16*75 = 1200/40000 = 0.03*100 = 3% return in 7 days.

Please remember that selling naked options is dangerous therefore you must learn hedging techniques. What if this trade went wrong? Losses could be unlimited. On top of that there was stress to close this trade in profit as soon as possible to get rid of unlimited losses. Therefore I highly recommend my course where you learn proper hedging techniques to not only limit losses but also make consistent profits month after month.

Puts are Costly than Calls – Arbitrage opportunity:

Nifty is currently at 7450. Considering 7450 as ATM (At The Money) here are the prices.

31-Mar-16 PE 7,450.00 158.50
31-Mar-16 CE 7,450.00 109.20

There can be lots of reasons why one call is costlier than puts (70% of the times), and why puts are costlier than calls (30% of the times). Every time the reason can be different but this time I think since Nifty was falling sharply since long, the Puts became costly and it will take some time for both the Options to get normalized.

But we are least bothered about it, because those who love arbitrage here is an opportunity:

Do ATM credit spread on the Put, and with the money you get buy a near Call. Three things can happen now:

1. If Nifty does not move then there is nothing much to lose as you did not pay anything from your pocket.

2. If Nifty goes up – great you make money for free. Best situation and very likely. 🙂

3. If Nifty goes down there can be loss. Right now it looks very difficult that Nifty will fall suddenly. But if that happens you must be ready to take a stop loss. Remember that credit spread means there is a protection so the losses are limited.

Disclaimer: Since the above strategy is Free For All – No support will be given on this. Please trade on your own risk. I am very busy helping my paid clients grow their income.

For those who have done my conservative course – What to do now?

Stop Loss Hit In Strategy 1 After Long Time.

So basically this unexpected swift movement of Nifty caused some damage and our Strategy 1 hit a Stop Loss after a long time. Remember my article of “6800 Bottom For Nifty” – well it reversed from there and how. 🙂

Please do not panic. The success rate is 80% anyway and as traders we should know that sometimes stop loss will be hit and we have to take a small loss. Those who are seeing this Stop Loss for the first time must be overjoyed. Why? Because earlier when they used to take stop loss (when they traded on tips or on their own) – the stop loss took away months of profits. But here with our highly conservative strategies, the losses are small and manageable. At max we go back 5-6 days. So we get enough time in the same month to recover our losses by trading Strategy 2.

Remember when you called me and inquired about the strategies, I told you the same that there can be losses but they will be far and few and small and manageable. This is the time to experience it. This is pretty normal and may happen 2-3 times a year.

Strangely some of my clients do not see losses for a long time. But lets not count them. Even I consider myself an average trader. But I have learned to control greed – that itself makes me much better than 80% of the traders. The rest the conservative strategies and discipline takes care.

Today I am happy with even 1% profit in a month. When I make only 1%, I tell myself 1% return a month is 12% return a year, which is much better than Fixed Deposit in a Bank, and is certainly much much better than losing money trading.

Fact is over a period of time we know we will make more than 12% a year. 🙂

When VIX is high usually I do not go to Strategy 2 if the SL is hit. We are still getting great premiums – so why not just shift the whole Strategy 1 to new strikes with 7400 as ATM?

Do that now if the stop loss is hit. Please shift the whole Strategy 1 to 7400 as ATM. Those who did not trade can still trade Strategy 1 now.

When we started this trade, VIX was high – but now it has fallen. Because of this the losses also gets small.

That’s the beauty of this strategy – if VIX falls then we also lose less even if the momentum of Nifty movement is high.

Once the movement stops – there will be calmness for months and we keep making money again for months.

Keep trading and enjoy the journey, and please do send me feedback by email.

Many Thanks.