Escape's Options Trading Diary - Phase 2

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Bought 2 lots of Nifty 12OCT2012 PE 5800 @ 134.95, SL 130.00, CMP 136.45

Exit @ 132.50, loss of 2.45 points, less brokerages.

 

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Did some smaller trades, squared-off all positions now.

 

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Here is log as of last session.

Log:
NIFTY 25Oct12 CE 5600.00 (B) 600 @ 118.08 (S) 600 @ 116.23 (P/L) -1110.00
NIFTY 25Oct12 PE 5800.00 (B) 1800 @ 130.87 (S) 1800 @ 131.91 (P/L) +1872.00

Result:
After deducting all charges: Rs. +189.68

Capital Status (Since September):
Exact Initial Capital: Rs. 45,000/-
Current Ledger balance Rs. 30875.32 (-14124.68 )

Learning/Remark:
Until 12:30 PM, market was range-bound and it was difficult to trade. After that it broke and NIFTY went down. At one moment my MTM was around 2K+, but ended day with just Rs. 189 gain. And this is because I over-traded in later part of day.

At few locations, I exited bit earlier being I kept SL too close. But in case of negative trade, I have observed that I normally keep initial SL intact and allow it to get hit, having bigger loss.

Phase 3 Preparation:
Meanwhile I'm preparing for Phase 3 backgroud, i.e. using strategies for Options trade as suggested by DanPickUp. Hopefully by end of this month, it will be ready.

Draft Objective:
Using Options Strategies to trade options, and main focus would be adjusting and handling losses, to make loosing trade into winner.

Draft Strategy:
Will be using "Calendar Spread" Strategy.
More details needs to be added here.

Draft Method:
1. Based on moving average, if NIFTY is above 100 moving day average and RSI is below 80, and is not at critical Resistance level, go Long for CE (ITM) for Next Month series, else go Long for PE. Define certain "SL for Short" immediately, once "SL for Short" is hit, go Short for same option type (CE or PE) for current month series in ATM.

2. Observe Long position on subsequent day and in case market moves in our direction, trail SL up. In case if market moves against our direction and "SL for Short" is hit, go short for same option type for current months series in ATM.

3. Target for Long Position?

4. If Long shows 50 (or certain number) profit, should exit or trail SL up .. which SL .. "SL for EXIT" or "SL for Short".

5. How do I define "SL for Short"?

6. If short position chain is expiring as "zero" or "near zero" on expiring day, should I exit from Long or keep it further?

Draft Plan:
I'll be trading only NIFTY Index Option chain.
Will trade only 1 lot for Long position for next months series.
Will go Long on last or first week of month.
Will go short if "SL for short" is hit.
In case if "Short" value decreases(in favour) means Long position against us, let expire "Short" near zero, else square-off on expiring day (or near expire day). You will earn limited gain. What to do with Long after this?

In case if "Short" value increases (against us) means Long position is in our favour, exit "Short" immediately or based on some SL value.

Draft Result Expected:
TBD

Draft Challenges:
TDB

Expectations from forum members:
TBD
__________________

 

[escape]

Bought 2 lots of Nifty 12OCT2012 PE 5800 @ 127.75

Exit @ 129.75, profit of 2.00 points, less brokerages.

 

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Bought 2 lots of Nifty 12OCT2012 PE 5800 @ 136.75, SL 130.00, CMP 136.25

 

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Bought 2 lots of Nifty 12OCT2012 PE 5800 @ 136.75, SL 130.00, CMP 136.25

SL hit @ 130.00, loss of 6.75 points, less brokerages.

Mistake: As I took this trade assuming breakout, I should have kept SL 2-3 points below Buy rate.

 

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Bought 2 lots of Nifty 12OCT2012 PE 5800 @ 138.25, SL 135.25, CMP 139.25

 

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bought 2 lots of nifty 12oct2012 pe 5800 @ 138.25, sl 135.25, cmp 139.25

sl @ 138.75, cmp 142.00

 

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bought 2 lots of nifty 12oct2012 pe 5800 @ 138.25, sl 135.25, cmp 139.25

sl @ 146.25, cmp 147.90

 

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sl @ 146.25, cmp 147.90

SL hit @ 146.25, profit of 8.00 points, less brokerages.