Escape's Options Trading Diary - Phase 2
End of Day Report:
As yesterday positions were open, so just giving:
Capital Status (Since September):
Exact Initial Capital: Rs. 45,000/-
Current Ledger balance Rs. 29556.67 (-15443.33 )
Learning/Remark:
For last few days I have observed, first half part of day I'm doing well, during first half most of time my MTM goes above 2K, but later part of day, some how I end with over-trading and lose whatever earned in first half.
Seems once MTM crosses 2K or after any big move (when I gain above 10-12 points in single trade), I get over-confident and go with crazy trade and hence end up with negative or mere profit.
In next week, I need to keep this in mind.
As yesterday positions were open, so just giving:
Capital Status (Since September):
Exact Initial Capital: Rs. 45,000/-
Current Ledger balance Rs. 29556.67 (-15443.33 )
Learning/Remark:
For last few days I have observed, first half part of day I'm doing well, during first half most of time my MTM goes above 2K, but later part of day, some how I end with over-trading and lose whatever earned in first half.
Seems once MTM crosses 2K or after any big move (when I gain above 10-12 points in single trade), I get over-confident and go with crazy trade and hence end up with negative or mere profit.
In next week, I need to keep this in mind.
I also found myself doing this yesterday.. :lol:
In the first half was in a profit of Rs. 820 over my lil margin of 5600, but in the later half with overconfidence and in the greed of making more, lost all 800, I have done total 7 trades after that, all the brokerage will be cut from my original money
Still need to learn to call it a day once target of that day is achieved.
Best of luck.:thumb:
In the first half was in a profit of Rs. 820 over my lil margin of 5600, but in the later half with overconfidence and in the greed of making more, lost all 800, I have done total 7 trades after that, all the brokerage will be cut from my original money
Still need to learn to call it a day once target of that day is achieved.
Best of luck.:thumb:
Hi
I was reading dear Sunny_ndl analyzes and thoughts about dear Escapes trading style and I saw some good and surely useful comments in it. Dear Sunny_ndl has posted his observations in clear words. Following some of them:
- Your trading style is fixed. It is scalping type
- After I reading your diary; I can say emphatically that you lost not because of wrong in market direction. You lost due to HEAVY POSITIONS.
- The big observation what I made is: You are trading ITM options with tight stop loss. This is very clearly suicidal. My logic (I benefitted) is by trading ITM calls with out giving enough room to price fluctuation; you are trading against your better interests.
- Minimum allowance should be given to nifty, ie 20 to 30 points. Of course; your scalping type trading personality may not accept this long head room.
- More over, you are simple trading intraday and so you need not worry about time decay.
- The execution of Calendar spreads are in some cases mid term gestation ideas. Means: We have to open the trade for a few days and longer.
- You and your trading style should synchronize. !
Finding out what style of trading fits our personality best is not as easy as it sounds. I think every body has to test what she/he is capable for and what makes she/him feeling good when being in the trade. I prefer a mix: Some times short trades and other times bigger time frames.
Trading ITM options and trading OTM options are two different things, as the delta of those options have a big impact on there moves. If market has a low volatility, OTM options are not very interesting.
Why do we trade? We trade to make money. Making a few cents is not worth the time we spent and if there is no volatility in the market, OTM options are only placed as insurances and not for real trading purposes.
If we have high Theta (Volatility) in the market, OTM options can be an option to reduce our risk compares to the ITM options. We also could start playing positional strategically plays in swing markets with the OTM options. With other words: We start to leg in to strategies with this OTM options. By using OTM options, you really have to know and to be clear why and when you want to use them. The same knowledge is needed by specializing our selfs to ITM and ATM options.
Covered Call. What dear Sunny_ndl is talking about in his post is called a Call Credit Spread and not a Covered Call. I know that we can get confused about names by so many existing option strategies. So, never mind about it. As I not want to lose much on that, read in the following link: http://www.optionseducation.org/strategies_advanced_concepts/strategies/covered_call.html/
Good trading
DanPickUp
I was reading dear Sunny_ndl analyzes and thoughts about dear Escapes trading style and I saw some good and surely useful comments in it. Dear Sunny_ndl has posted his observations in clear words. Following some of them:
- Your trading style is fixed. It is scalping type
- After I reading your diary; I can say emphatically that you lost not because of wrong in market direction. You lost due to HEAVY POSITIONS.
- The big observation what I made is: You are trading ITM options with tight stop loss. This is very clearly suicidal. My logic (I benefitted) is by trading ITM calls with out giving enough room to price fluctuation; you are trading against your better interests.
- Minimum allowance should be given to nifty, ie 20 to 30 points. Of course; your scalping type trading personality may not accept this long head room.
- More over, you are simple trading intraday and so you need not worry about time decay.
- The execution of Calendar spreads are in some cases mid term gestation ideas. Means: We have to open the trade for a few days and longer.
- You and your trading style should synchronize. !
Finding out what style of trading fits our personality best is not as easy as it sounds. I think every body has to test what she/he is capable for and what makes she/him feeling good when being in the trade. I prefer a mix: Some times short trades and other times bigger time frames.
Trading ITM options and trading OTM options are two different things, as the delta of those options have a big impact on there moves. If market has a low volatility, OTM options are not very interesting.
Why do we trade? We trade to make money. Making a few cents is not worth the time we spent and if there is no volatility in the market, OTM options are only placed as insurances and not for real trading purposes.
If we have high Theta (Volatility) in the market, OTM options can be an option to reduce our risk compares to the ITM options. We also could start playing positional strategically plays in swing markets with the OTM options. With other words: We start to leg in to strategies with this OTM options. By using OTM options, you really have to know and to be clear why and when you want to use them. The same knowledge is needed by specializing our selfs to ITM and ATM options.
Covered Call. What dear Sunny_ndl is talking about in his post is called a Call Credit Spread and not a Covered Call. I know that we can get confused about names by so many existing option strategies. So, never mind about it. As I not want to lose much on that, read in the following link: http://www.optionseducation.org/strategies_advanced_concepts/strategies/covered_call.html/
Good trading
DanPickUp
Dear Escape
Regarding this post: http://www.traderji.com/trading-dia...ns-trading-diary-phase-2-a-50.html#post733250
In general: Your understanding of the idea is correct.
Point 1: There is no fix rule for that. If you think you want to keep the long call, set a trailing stop or reduce your position in case you have more than one unit in play. I do not pyramid and so my advice would be to save or take some profit instead of putting in more money in to the trade. You decide. Here you have to have clear ideas about your MM and your trading plan, in which you must have clearly defined your entry and EXIT targets.
If you feel able, you also could use that leg to implement specific other option strategies. But that is more for absolute option pros.
As you are not bad in predicting market direction (How ever you do it), you surely can jump again in the market when the correction is over.
Point 2: If this TA has worked for you in the past, then stay with it. I personal include trend lines and Maths in my trading. Analyze the Theta in the market (Underlying), as this is a buying strategy at first as you go long. Buy only when the SV and the IV is low (Theta in the underlying and theta in the option).
Point 3: Now to your stop loss in Indian Market: Your stop loss should be less defined on the chart. Your stop loss is more defined through the price you can recover with the sold option.
If you paid 270 Rp and your actual loss is 100 Rp, you need to sell an option which brings you back at least this 100 Rp. If market stays in a range, you will have that 100 Rp and you still have the long position, which had lost some time decay during that period.
If the sold option now expires worthless, you have made the 100 Rp and now you still have to recover the loss you made through time decay on the long option. Here again, you sell the next option. This time you sell an option from the same series like the one we have ongoing in the long option. This then is called a vertical Call spread.
This game you can fine tune by using more ITM, ATM or OTM options, depending on your risk appetite and your market outlook. Test it and you will see how different your test results would be. I only compared the following option chains and found various combinations for such trades:
October Series: http://i50.tinypic.com/2ibnoua.png
November Series: http://i47.tinypic.com/wj6kwn.png
December Series: http://i47.tinypic.com/344uzyh.png
The strategy is not as easy to trade as it sounds. You have to know what you do and the way we discuss here is not much tested in the past with Indian options. It normally is traded with LEAPS, which are not traded in India. The LEAPS option is used against the share and then the normal option is traded in the same strategy depending on market direction. In that way we not need any stop loss on the chart. You can act accordingly to market moves. But as told: Leaps are not offered in India and so we have to change the idea to what is possible in India.
Any questions so far?
Good trading
DanPickUp
Regarding this post: http://www.traderji.com/trading-dia...ns-trading-diary-phase-2-a-50.html#post733250
In general: Your understanding of the idea is correct.
Point 1: There is no fix rule for that. If you think you want to keep the long call, set a trailing stop or reduce your position in case you have more than one unit in play. I do not pyramid and so my advice would be to save or take some profit instead of putting in more money in to the trade. You decide. Here you have to have clear ideas about your MM and your trading plan, in which you must have clearly defined your entry and EXIT targets.
If you feel able, you also could use that leg to implement specific other option strategies. But that is more for absolute option pros.
As you are not bad in predicting market direction (How ever you do it), you surely can jump again in the market when the correction is over.
Point 2: If this TA has worked for you in the past, then stay with it. I personal include trend lines and Maths in my trading. Analyze the Theta in the market (Underlying), as this is a buying strategy at first as you go long. Buy only when the SV and the IV is low (Theta in the underlying and theta in the option).
Point 3: Now to your stop loss in Indian Market: Your stop loss should be less defined on the chart. Your stop loss is more defined through the price you can recover with the sold option.
If you paid 270 Rp and your actual loss is 100 Rp, you need to sell an option which brings you back at least this 100 Rp. If market stays in a range, you will have that 100 Rp and you still have the long position, which had lost some time decay during that period.
If the sold option now expires worthless, you have made the 100 Rp and now you still have to recover the loss you made through time decay on the long option. Here again, you sell the next option. This time you sell an option from the same series like the one we have ongoing in the long option. This then is called a vertical Call spread.
This game you can fine tune by using more ITM, ATM or OTM options, depending on your risk appetite and your market outlook. Test it and you will see how different your test results would be. I only compared the following option chains and found various combinations for such trades:
October Series: http://i50.tinypic.com/2ibnoua.png
November Series: http://i47.tinypic.com/wj6kwn.png
December Series: http://i47.tinypic.com/344uzyh.png
The strategy is not as easy to trade as it sounds. You have to know what you do and the way we discuss here is not much tested in the past with Indian options. It normally is traded with LEAPS, which are not traded in India. The LEAPS option is used against the share and then the normal option is traded in the same strategy depending on market direction. In that way we not need any stop loss on the chart. You can act accordingly to market moves. But as told: Leaps are not offered in India and so we have to change the idea to what is possible in India.
Any questions so far?
Good trading
DanPickUp
Dear DanPickUp,
Thank you for your post.
Few observation made by Sunny_ndl is absolutely correct regarding my trades and Stop Loss.
Last weekend I have spent sometime considering those and I'll try to change my Stop Loss strategies, this in turn will keep me longer in trade and will help me avoid smaller trades.
Regarding Long and Short term trades, yes for strategies based Options trade, I'll go for longer term and for naked-based Options or Futures trades, it will be shorter term.
Also thank you for clarifying "Covered Call" and "Call Credit Spread".
Let's see how I progress. Experience and outcome of trades will direct future direction.
:thanx:
Regards,
Escape
Thank you for your post.
Few observation made by Sunny_ndl is absolutely correct regarding my trades and Stop Loss.
Last weekend I have spent sometime considering those and I'll try to change my Stop Loss strategies, this in turn will keep me longer in trade and will help me avoid smaller trades.
Regarding Long and Short term trades, yes for strategies based Options trade, I'll go for longer term and for naked-based Options or Futures trades, it will be shorter term.
Also thank you for clarifying "Covered Call" and "Call Credit Spread".
Let's see how I progress. Experience and outcome of trades will direct future direction.
:thanx:
Regards,
Escape
Dear DanPickUp,
Thank you for going through my queries and answering them, also confirming that my understanding is correct.
For my first "Calendar Spread" strategy, I'll be considering December (Long) and November (for Short). Most possibly I'll be going for NIFTY DEC PE 5700 or PE 5800.
In India at the movement there is high volatility in market, in case of NIFTY Option chain which are near ATM, some time ATR is around 50-60 points. This may be bigger concern while defining SL.
Yes you correctly said, although on paper it seems strategy is very simple, but on reality it will difficult.
Also, I'm currently spending time to understand other Options geek terms and their significance and getting ready for first strategy based trade.
:thanx:
Regards,
Escape
Thank you for going through my queries and answering them, also confirming that my understanding is correct.
For my first "Calendar Spread" strategy, I'll be considering December (Long) and November (for Short). Most possibly I'll be going for NIFTY DEC PE 5700 or PE 5800.
In India at the movement there is high volatility in market, in case of NIFTY Option chain which are near ATM, some time ATR is around 50-60 points. This may be bigger concern while defining SL.
Yes you correctly said, although on paper it seems strategy is very simple, but on reality it will difficult.
Also, I'm currently spending time to understand other Options geek terms and their significance and getting ready for first strategy based trade.
:thanx:
Regards,
Escape
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