Part of newsletter sent on Sunday, October 11, 2015 to my newsletter subscribers. If you want to receive such newsletters please subscribe at the end of the post.

Read to know how you can trade Infosys (Infy) on quarterly results day – this can be traded after the results are declared.

Refer my yesterday’s email on trade to be taken on Infosys tomorrow.

One of my subscribers informed me this – “Infosys results are to be declared before opening of Markets on Monday. If the strategy is on Infosys, can we still take position after results declaration as market would have already moved in one direction.”

I have confirmed and I see that Infosys will announce results at around 8.45 – 9 am tomorrow. In that case the movement will occur as soon as markets open. There will be a gap opening. The directional trade of my course needs movement – it does not matter where. Those who traded on Friday will get lucky. If the movement has already happened, then its better not to take that trade.

The news is out by that time means VIX also would have dropped as on Friday it rose by almost 20% before closing. So there is no point in selling options. It is now almost 3 weeks to expiry – we have enough time on hands.

How To Trade Infosys On Quarterly Results Day

If the Infosys drops too much say more than 5% – just buy a Future and hedge with buying ATM PUT in the hope that the trade will be profitable in the next few days.

And of course if Infy opens more than 5% up – sell a Future and buy ATM call in the hope that Infy will fall and the trade will be profitable before expiry.

Where to take profits out?

Since I am a 3% man – take profits out when you are making 3% on margin blocked. 🙂

What is the maximum loss in the trade?

The premium you pay to buy options – that’s it – therefore you can stay long in trade.

When to take Stop Loss?

No need since the trade is hedged and max loss is defined.

Why am I taking the opposite trade?

Infy traders are known to give knee jerk reaction to quarterly results which makes the price either too cheap for short term or too costly – both will correct over time.

What happens if you make a profit?

Just say a Thank You. That’s enough for me. 🙂

What happens if you make a loss?

Yes that’s a possibility that’s the reason I am asking you to hedge and not trade naked. The real idea is you learn the benefits of hedging.

Do not lose money friends – the stock market is there to help us increase our wealth NOT destroy it. So please trade sensibly.

Still I will be sorry if you make a loss in this trade, but my intention is to help. Stock market trading is a risk and that risk you will have to take. However with hedging your risk gets minimized.

Thank you Mr. Purushottam. Your email helped me to inform others well before opening of trade on Monday.

Please keep such emails coming. Though I read a lot, its humanly not possible to read everything related to stock markets. If you send me suggestions I will be able to help others as well. That way we all can grow. Its not possible for me to keep track on everything so please inform me of any events that may shake markets or a stock.

By helping others you always feel good.

Thanks for being my subscriber.

Learn Conservative Trading Today and enjoy the benefits of Hedging and conservative trading.

Note: Part of email sent to my subscribers on 09-Oct-2015. If you want to receive such newsletters please subscribe at the end of this post.

On September 4, 2015 I had recommended to buy ICICI Bank shares. On that day the share was trading at 256.

You can read the email by clicking here.

In that email I had said, “If you have free cash you can buy ICICI Bank equity shares in cash for a quick 10-15% return probably in 2-3 months.”

Right now ICICI bank is trading at around 285.

This is a return of 11.32% in just 35 days. 🙂

If you listened to my advice and bought the stock, please sell and book your profits.

11.32% return in about a month is a great return.

Hell, I made some more profits here. 🙂

Why I Did Not Buy Options of ICICI Bank?

That is because my view was bullish but I had no idea when the target will be hit. Like I said in that email my view was that it will take about a couple of months or more to hit that target. Now if I buy options and the stock does not move for a month then I lose all premium paid for the stock. Mind it ATM (at the money) options on stocks are very costly. I did not check but it must be close to Rs. 20,000 for one lot. So what happens is my view is correct but I still lose 20k – that’s pretty bad. It is no good situation to be in. I mean your view is correct but you still end up making a loss. If my view is correct I should be able to make money – it does not matter to me from where the money comes. For me a profit is a profit – it does not matter it comes from stock buying or option & future trading.

Why I Did Not Buy Futures of ICICI Bank?

Agreed had I bought Futures my profits would had been much more, but again it was not an option. Today if the stock was at 200 – I would have been sitting at a huge loss. This is something I really hate. I am OK with a small loss but I will never take a trade that can make a huge loss. Yes I could have hedged my Future trade by buying a Future and buying a Put as well – but again that would mean that the trade will finish on the expiry day of September 2015. I will have to take profit or loss on that day whatever it is. Since my view was that the stock will take at least 2 months to reach there – my trading plan and risk management was not allowing me to trade Futures even with hedging.

It is a totally different thing that the stock hit the target in one month. But I don’t look at it that way. I know I could have been wrong – and on something that’s very predictable I do not want to lose money there. I am willing to wait for my profits. Also I can be wrong next time. So I will trade only what is the best possible trade there. I will not force myself to trade options or futures or cash. I will take my view, and plan accordingly without any bias towards the instrument I am going to trade.

It is my money after all and I will trade what is the best possible trade for me at that time.

I am now looking to hedge my mutual funds profits here through options, as I have decided on a 10% return, I cannot let go a 6% return which it is currently at right now.

If I do a trade will surely inform you.

If you have not taken my course I strongly suggest you do it now. Lot size is increasing next month 3 times on Nifty. So if you are losing money I bet your losses will increase 3 times too. Do not let that happen. Invest in knowledge. Please do not waste your time and money with tips providers or your brokers’ recommendations. Only knowledge can help you make money from stock markets. And if you think you cannot learn then sorry you are mistaken and are underestimating yourself. If you decide to learn no power on this earth can stop you from learning.

Click here to read about my Conservative Strategies Course Now.

Hope you are enjoying the newsletters and making some money too. 🙂

Thanks for being my subscriber.

August and September 2015 were really though for both option sellers as well as buyers. When the volatility is just too high and not willing to go down then its not a good sign for option sellers, as even if the time passes option prices do not melt.

For buyers its the stress rather than the volatility. Simple reason being they pay more to buy options – that’s stress. When VIX was low they never paid so much to buy an option of a similar strike. Say ATM (at the money) – when VIX was hovering around 12-15 they only paid 120-150 for ATM option. VIX at 20 means they will have to shell out 200 or more points to buy ATM option.

Exactly 4 weeks to expiry Nifty ATM 8100 CE is quoting at 174.00. VIX at 19.88. This after two weeks already passed since the start of October 15 series.

So lets assume buyers were lucky last time and made a cool return. At that time VIX was low and ATM option was quoting at around 150. If they take it out at 200 – a 50 points profit. Next month when VIX is high they need to shell out the principal + the profits made from previous trade to take a chance. Now when this option reaches 150 – the buyer is not willing to take a loss since his reasoning is that after all at this point he is breaking even and can therefore wait. Unfortunately one day movement against the buy option will take the option to 100 and he is staring at a loss of 50 points and two months time gone.

VIX high is very good for option seller as now they get more money for the same risk they are willing to take. However there is a new problem they have to face and that is of huge volatility in markets.

If you look at Nifty movement last 2 months the high was 8563 and the low was 7545. That’s 1018 points from high to low. In percentage terms fall was 11.88%.

This was a great trading opportunity.

What Can You Do When The Fall is More Than 10% in Index

See we are talking about an Index, and not a stock. There is more of a chance of recovery in Index than a recovery in stock. And I am a person who look for such opportunities and what can be done to use these kinds of opportunities.

If you remember I sent an email a few days back on what I traded when Nifty was around 7545. You can read it here: http://www.theoptioncourse.com/how-to-trade-mutual-funds/

Here is a small snippet from the post on what I traded:

Instead of doing FDs, I park extra cash in ICICI Prudential Flexible Income Fund – its a liquid fund giving around 9% return. So the large cap fund had to be from the same fund house as switching is possible in the same fund house.

The best large cap fund as of now in the ICICI mutual fund house is the ICICI Prudential Focused Bluechip Equity Fund.

Source and Target decided.

Here is What I Did

I logged in my account and switched 50% of the cash from ICICI Prudential Flexible Income Fund to ICICI Prudential Focused Bluechip Equity Fund.

Well at the time of writing Nifty is at around 8120 levels and the ICICI Prudential Focused Bluechip Equity Fund is giving a annualized return of 78.14%. Point to point return in 6%. 🙂

The trade was done on 4th September 2015 – today is 8th of October. 6% return in 34 days. 🙂

A lot of people will do this and make a profit. And next time when they get an opportunity they will shift all their money to some fund because they made a quick profit last time. This is where traders do mistake. They do not define risk and once they are in profits get into the next trade with all force. Then they lose it all.

Look at how I only took a part out of holding in my liquid fund and transferred cash in an equity fund.

Why I did Not Buy Options When I had a Bullish View

Read that article again. My only wish was to bet the returns given by the liquid fund. That’s it – no greed here. That too on a part of my holding in that particular fund.

Lets do some trading on options:

On that day (4th Sep 15) the 7600 CE was quoting at 220. And at expiry day (24th Sep 15) it closed at 269. Well great if I held it till expiry my return would have been 22.27% in a matter of 20 days. But the big question is how do I know?

You know what on 07th Sep 2015 the same option was quoting at 154.60. Hey you really need heart not to take a stop loss at that level. At that time as an option buyer my only feeling would had been what if this option expires worthless?

And I am 100% sure I would have taken a loss and exited the trade. And the loss would had been 30%. So 30% of a big chuck of my saving gone in 3 days. 🙁

These are the situations I will avoid at any cost. I will not let greed overtake me even if there is a 99% guarantee that a particular trade will make me money.

I will protect my hard earned money – divide my risk – and take a calculated risk with my trades.

Why I Did Not do Both The Trades?

You mean trading the mutual funds and also buying the option. I will NEVER increase risk in a particular view. Here my view was for 1 year not 30 days. And once the target was clear it did not allow me to buy options. Today if Nifty was at 7400 – still I would have been happy as I know I still have 11 more months to hit my target. Even if it does not hit I can still hold it longer. With options however there is a time limit and that time limit is very short to make a trading decision.

I am only a Future and Option Trader – Please Tell Me What Can I Do in Such a Situation

If you find a great opportunity in a stock or even Nifty there is nothing wrong in trading it with derivatives but you must ensure 2 things:

1. Risk is defined (its not unlimited and also it not very large so as to impact your demat account)
2. The trade is hedged (for overnight protection)

I mean I have told this thousands of time and I tell it again to Future buyers and Sellers – hedge your trades with options. There is a great hedging trade in my course that you can trade if you have done my course OR at least buy ATM options to protect unlimited loss your Future can take.

If selling Futures buy ATM Call and if buying Future buy ATM Puts. There you are your unlimited loss is not limited to the price you paid for the options.

Next time Nifty falls 10% within a couple of months – come back and read this article. 🙂

Well enough for today.

A lot can also be done when Nifty moves 10% up within days – that is a shorting opportunity. Well that’s for another day.

This is how some people especially the young ones who were told by, ahem, well “someone” that lots of money can be made in the stock markets very fast think like this.

Read the WhatsApp message I got in my mobile today and enjoy.

Hey kid, to make 50 lakhs from 30,000 in 2 years will need a compound return of 1191% in both the years. 🙂 The best of the best option traders will fail to match even a tenth of that. And Warren Buffett the best stock market investor in history (who never traded options, futures or any other derivative) is currently averaging almost 30% a year, I think, since 1950. Last 15 years return of his company Berkshire Hathaway Inc., is a bit less that 25% compounded annually. Still amazing. Compare this to the aspirations of this young kid. 🙂

Well do you think 30% a year is less? If someone started trading in 1950 (the year Warren Buffett started trading), with just Rs.1000 (one thousand only) and made a modest return of 30% a year, today after 65 years, his investment would be worth Rs. 25,486,951,936.00. (More that Rs.2,500 crores – yes more than Two Thousand Five Hundred Crores). Calculated using this compound calculator.

There was another WhatsApp message by a young trader just out of college who told me that “positional trades are boring”. He did not take my course because it teaches positional strategies only. He was only interested in Intraday strategies. Well really? I can bet that at least 5% of positional traders are making money but 99.99% intraday traders are losing – yet the young ones love intraday trading.

Agreed, intraday trading is more fun. But we get into trading to make money not to have fun isn’t it? That is one reason why you see thousands of tips providers offering tips on Intraday trading. How many of them offer positional trading tips? I think less than 10%. It is easy to sell Intraday tips, and very hard to sell positional stock options and futures tips. Business goes where money is there. It is a different story what happens after you pay them.

Intraday traders hit the reality once they lose 1 or 2 lakhs. Some are stubborn and end up losing more than 2 crores.

Stock market is a business. Just because entry barrier is easy does not mean it’s easy to make money in Stock Markets. On the other hand, those who understand, have the knowledge and discipline to invest, and show patience can grow their wealth over time.

The real reason why people lose money in stock markets is that they have huge expectations, they are greedy and they just do not have patience. They all want to get rich in one trade that gets over by the day markets close. How is that even remotely possible?

Like the story “slow and steady wins the race” – it’s the same in stock markets. Those who invest slowly, trade with discipline and diversify their risk are the ones who will make money.

Those who come with lakhs and risk crores to make crores, lose crores. Stock market is NOT a place for greedy people and people who want to get rich quick. This is one market where rich or poor does not matter. The only thing that matters is the trading strategy.

Manage risk, take calculated risk, know where you need to get out of trade and grow your money slowly. And yes compounding is also very important, else you will end up having some fun for years and end up with nothing to show. If you do not compound, even if you are making Rs.100 a day, you still end up making the same amount years from now.

Once you get to know the strategy that works for you – just start increasing your trading capital on that strategy. Again slowly – like 1 lot increase every month. Remember one lot is not a small amount – it is going to be more than 5 lakhs from November 2015 once the new lot size comes into effect.

Some people think that the margin blocked is the max risk. No its not. When you are taking unlimited risk like trading Futures – you can lose more than the margin blocked. Ask traders who get a margin call. A lot of them got that call when Nifty nosedived by 6% in one day on 24-Aug-2015.

That again is a big reminder how hedging your trades is very important if you are leaving them over-night.

I got a call from a trader the day Nifty fell 6%. He made 3 lakhs selling naked options in 2 months, and that day was sitting at a loss of 13 lakhs. He got a margin call from his broker and he called me. Tell me how can I help? Of course I cannot give him 10 lakhs. 🙂 Though I gave him an idea, but to be frank he did not contact me after that so I do not know what happened to his trade.

Conclusion:

The motto of the post is that it is possible to make a lot of money from the stock markets – but you can’t do it by speculating or taking tips from anyone. And also do not expect that you will get rich in a day or even a few months. But you can get rich, very rich, if you are willing to put in efforts and have patience to wait for a few years to make it rich.

So, Stop Dreaming – Start Working!

Note: Newsletter sent on 29-September-2015 to my subscribers.

Refer my yesterday’s email: What to Trade Tomorrow RBI Policy.

RBI surprised everyone by cutting repo rate by 50 bps. There was a knee jerk reaction to this and within a matter of seconds Nifty jumped from 7700 to 7800 exactly at 11. However after that there was a slight drop – obviously a 100 points run will trigger stop losses of a lot of trades.

Interestingly VIX did not fall till around 12 noon – but after that VIX stated falling and Nifty rallied from 7762 to 7917 – almost 155 points – that’s 2% Intraday.

INDIA VIX closed at 21.57 which is 0.46% lower than yesterdays close. Frankly I was expecting more fall, but I can assure you this will fall further in days to come.

Those who took this trade – “If Nifty going north (up) – Sell ATM Put and buy OTM Put”, would have made good profits. Unfortunately from 11 to almost 12 Nifty kept falling, so I am sure some trader may have taken the opposite trade. But I am sure they experienced how the hedge saved them from a huge loss (if they hedged) – on top of that VIX falling ensured the loss was minimized.

I hope you learned two lessons out of today’s trade:

1. Sell when VIX is falling and Buy when its going up, and,
2. Hedge your trades so that the risk is managed.

Remember I also told two methods for taking profits. The first one would have given the maximum profit to the trader – After some time if the trade is in 5-7 points profit, increase your stop loss by 3-5 points until Nifty breaches it. Close the other (buy trade) as well. This will give you the maximum profit for the day. (Best method)

This would have hit SL when Nifty was around 7900. See how after 7917 Nifty came down and closed at 7843.

Frankly if you ask me Intraday trading is best avoided. It is a full time job and it still ain’t easy to make money Intraday. Intraday is more about practice than technical or anything else. Scalpers are the ones who can make money trading Intraday. But its more of an art than science. And its a full time job.

I am sure there are many traders (you could be one) who have a job or a business and also trade Intraday. This is dangerous.

Think seriously. How is it possible that you are present at two jobs at the same time and doing great at both? One or the other will suffer – usually its trading.

If you are one of those who are on a full time job or business and trade Intraday then my request it to think again. If you are doing good, then congrats, continue. But if you are doing this since the last 3-4 months or more and losing money than stop trading Intraday right now. Hope does not make money.

And if you decide that you will leave your job to try Intraday than I would suggest get another Job that you love. But do not try Intraday trading by leaving your job. This will prove to be a financially destructive decision. You may repent your whole life.

Getting a job paying 30,000 a month a very easy now days. But making almost 1500 everyday trading is very difficult. (There are 22 trading days in a month so you will have to make more then 1000 a day.) And within 6 months you can jump to another Job paying better or ask for a salary hike. Here you have just one Job and if it sucks you are gone.

Yesterday I got a call from a young buy just out of college who wanted Intraday tips. I asked him why he is not looking for a job. His answer was he wants to trade Intraday with Rs. 20,000/- in his trading account and want to make a lot of money in a few months. I told him to buy some books on Stock Markets and discouraged him from taking my course.

With 20,000 you cannot start a business – so how can you make a significant income with that money? Even if your return is 30% in a month you only earn 6000 a month and if you lose 50% next month your trading capital is now worth 13,000. You will not have the courage to trade again.

Then I get messages like “save me Sir lost 2.5 Lakhs last week by buying Infy options that expired worthless”. My eyes got pooped out – 2.5 lakhs gone in a week. Even if this guy earns 5 lakhs a year, he lost 50% of his salary in just a week.

I mean you must have that real guts to even buy options worth 2.5 lakhs. If this guy hedged his loss would have reduced by 80%. He felt bad that he did not hedge and is still thinking about taking my course. 🙂 Because I am sure he is now in a revenge mood – he will surly bring more money in his trading account to try to make 5 lakhs in a week. And you know the results.

After losing 10-15 lakhs he will probably take my course. 🙂

Still traders do not want to hedge. Strange!

Note: Newsletter sent to my subscribers on 28-Sep-2015. Please subscribe now at the end of the page if you have not subscribed.

Read to know what to trade tomorrow.

Tomorrow at 11 am RBI will announce their policy. Markets expects a 25 basis point cut in the repo rate. Looks like this will happen.

When markets expect something and the same thing happens, unless it isn’t something major, markets do not react OR react on just the same day. From day after tomorrow they will react to global news.

Which means the movement to the news will be restricted to trading day tomorrow if 25 basis point cut in the repo rate is announced.

Intraday traders some free trade for you. 🙂

Disclosures: I don’t trade Intraday. People who have taken my course know why. I am a very conservative positional trader happy with the 2-3% I make. I am not looking for a home run. I want capital appreciation slowly over time. Taking a loss is ok, but taking a big loss is not at all ok and at the same time I do not even look for huge profits. 🙂

So please trade this at your own risk.

VIX will fall after 11. It will be high till that time.
If you are buyer of Intraday options buy at 9.15 am and close before 11 am. Buy both sides. 🙂

Take this trade after 11 am – preferably around 11.30 to 12. Let it take direction – go with the flow.

We are least bothered how markets will behave – we just want to go with the flow.

If Nifty is going south (down) – Sell ATM Call & buy OTM Call (decide your own strike based on risk tolerance). People who have taken my course know which strike to choose – stick to that.

If Nifty going north (up) – Sell ATM Put and buy OTM Put (again decide your own strike based on risk tolerance)

When to close in profits?

2 ways:

1. After some time if the trade is in 5-7 points profit, increase your stop loss by 3-5 points until Nifty breaches it. Close the other (buy trade) as well. This will give you the maximum profit for the day. (Best method)

2. Set a target of 5-7 points and get out.

When to take a Stop Loss?

Since the trade is hedged – just close it at 3.15 pm (If its MIS the risk management software will close it anyway at 3.15 pm). No major loss is guaranteed.

If there is no movement there is no trade.

VERY IMPORTANT: I am helping you for free. Please do not WhatsApp me and tell your trades. I may not reply. You are getting more than what you pay to tips providers for free, so please respect my time.

I get too many messages on WhatsApp ON what to trade tomorrow. I am sorry but I do not trade for few hours. I know one day’s trade will not make me rich. But a few trades over the years will.

All the Best Traders.

Let me know the results in comments.

Thanks.

Learn Conservative Trading Today.

Note: Newsletter sent on 24th of September 2015 to my subscribers. If you would like to receive such newsletters please subscribe at the bottom of this page.

Today is 24th of September 2015. It is expiry day for all derivative trades done for the September 2015 expiry.

This email is a reminder that please DO NOT forget to close all Futures & Options contracts that will expire today by 3.15 pm.

Out of the money options that are sure to expire worthless need not be closed as they are worthless. But all Futures contracts and In The Money Options (ITM) needs to be closed. If you will not do it then your broker will close it anyway at market price, so its better that you close it and get the best possible price. If you do not close and your broker also does not close then the exchanges will close them at closing prices and they may fine the traders. On top of that you will know the rates only when the contract note is sent to you. This situation must be avoided. To avoid this kind of uncomfortable situation its always better that you close the trade yourself or ask your broker to close it and confirm that its closed before market closes for trading that day.

Put Credit Spread in Profit

Though I asked to book profits in the put credit spread advised on September 10, 2015 as these are uncertain times because the China issue is still lingering, I am sure some people did not. Well that put credit spread will expire worthless today giving a return of 3.7% (37 points) in 14 days. Those who closed earlier don’t feel bad, we made a profit that is it. Markets will give us another opportunity.

Free Trades

Yesterday someone called me and said that the free trades that I recommend through newsletters make more than 3% a month, so why would someone buy my course that only promises 3% a month?

My response was – what if I stopped giving free advice? Do you want to depend on my free tips for your whole life? Do you really want to trade like this?

The whole idea of this website and my course is that you DO NOT become a puppet in the hands of anyone including me.

Its your money – learn to manage it yourself. Learn to trade yourself.

Tips Providers Have Not Made A Single Person Rich

Name a single person on this Earth in history who has made a lot of money with the help of tip providers. You cannot name anyone, because they do not exist.

Now name a few people who made a lot of money in stock markets by investing it themselves through their knowledge and skills. Now you can name a lot of people. 🙂

When history is proof, why you want to believe that you are the person who will change history and become rich by tips providers?

There are thousands of tips providers out there and I bet you will keep changing them every month in the hope you get to the best one soon. I get many calls and almost all of them are still searching for that one good tip provider. Some are searching since the last 15 years. Not to mention the money lost. If you go with them, you lose money from two fronts – one by paying them – other by trading their tips. And the worst part is you also waste your precious time.

If you do not want to take my course. I am OK. But please do some good course somewhere or invest your money in books. Do not waste them on tips providers.

Basically invest your money in seeking knowledge, not on taking blind orders from someone you do not know. I know taking orders is easy, but learning is not. But which easy path has ever made money?

If you think you want to know more about my course then contact me.

I read and reply every email.

Many Thanks for being my subscriber.

Learn Conservative Trading Today.

Here is what traders have to tell about my course.

You can pay online here and start learning today.

Part of newsletter send on 23-Sep-2015 to my subscribers. Please subscribe at the bottom of this page.

I have never experienced Nifty dancing so much in such a narrow range for so long. Its almost a month now.

I am truly dedicated to help people who paid for my services and had and faith in me.

How To Profit Both Sides In a Trade?

If you have done my course, you must have got a lot of knowledge in hedging. Now why not implement that knowledge in real trading?

So this is what you can do – if it works returns can be amazing like 20-40% in one month and if it doesn’t the losses are limited. So free some cash and trade in less no of lots depending on your trading account.

See when rewards exceed risk – you must try and trade.

Nifty moving one day 1-2% up next day 1-2% down.

So open the directional BONUS strategy of Mr.Inder of my course.

There are two trades.

Read the FIRST one – NOT the second.

See how he took slight risk to deviate from the strategy and made a return of almost 17% in 10 days.

Try that. Use your brains and take calculated risk.

That risk works best when Nifty goes up and down in a few days with speed.

Which is happening now.

Take profits both side and enjoy.

Again DO NOT GET greedy. I told you to try on a small percent of your trading account NOT all. Stick to it.

For the rest keep trading strategy 1 and 2 if SL hit.

Also again a great opportunity to trade the conservative stock option. If you have cash I would suggest again ICICI bank. We already made some money on it last time – we will make it again.

I Have Not Taken Your Course Please Tell Me How To Profit Both Sides

See I cannot reveal the directional trade, but basically its hedging Futures with Options. When you make a hedge the Future trade is no more naked – so the stress is now out of the trade. You know that its now a limited loss trade. Now lets suppose Future made a huge profit. You can always book profit in Futures and hedge your options for further loss.

If Nifty reverses, the options can also profit and you can exit with making profits both sides. One good trade can bring great returns.

But to do this you must have knowledge of proper hedging. If you do not have hedging knowledge the trade can be disastrous. Its better to first learn hedging and try this method.

Mr. Inder got a return of more than 30% in one month because he took profits both sides, otherwise such a return may be impossible. If you do my course you will get his trades to learn how he hedged and made profits both in the Futures and Options of the trade.

More information of my course is here.

So its official.

From November 2015, the lot size of many stocks and all Indexes are increasing.

NSE is increasing lot size of Nifty from 25 to 75.

Here is the official link:

http://nseindia.com/content/circulars/FAOP30449.pdf

What does it mean?

It means that now you will have to keep more money in your trading account if you want to short options or buy or sell futures.

For stocks I think minimum amount required will be Rs.50,000 or more for selling one lot option or buying/selling Futures.

Unfortunately for Nifty too you will need 3X more. It means to short a Nifty Option you may need Rs.45,000 from November. Currently its just 15,000.

What does it mean for my course subscribers? More money. Because the return remains same i.e. 3%. 🙂

Why SEBI did this?

They wanted the retail traders especially the ones who enter markets to have fun to stop speculating. Shorting options by retail traders recently increased a lot and since unlike their US counterparts, Indians fail to hedge options – it became major concern for SEBI.

Shorting options can make a lot of money, but once a while may lose a lot of money. Unfortunately at that time an un-hedged position means unlimited losses – especially on the call side as virtually a stock can rise to infinity.

Leveraged product means losses multiply five times.

Will this ensure small traders stay out of markets?

I really do not think so. May be a few college students will stop trading, but most people will bring more money into their trading accounts and continue trading.

Yes liquidity in stock options will surely take a hit. Its already pathetic and am sure liquidity will fall further. That is not a good news as the gap in the bidding prices will increase.

However liquidity in Nifty and Bank Nifty will still be good. But frankly no one knows. It will be known only when trading in November series begins.

I will also rethink pricing my service as from November people who take my course should have at least 1 lakh in their trading account and will make more as well. This means only traders with a lot of money will take my course. For both these reasons, they should pay more. Justified isn’t it? Let me see.

Thursday is expiry. If you still have naked positions I highly recommend hedge it with options. Sellers are at unlimited loss and buyers are siting on a ball of Fire – if the option expires worthless they will see their money disappear. Similarly margin call for sellers must be avoided. Money disappearing or getting a margin call is the worst situation to be in for any trader.

Hedge it and avoid both.

My course teaches proper hedging methods. Whether you want to learn or not is up to you.

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

Pay for Online for Course here:
http://www.theoptioncourse.com/bank-details/

Thanks & All the best.