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/

Connect with me through Linkedin:
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.

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.