ICICI Bank Book Profits

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.

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