Day: April 11, 2021

Apr21-W3: Nifty consolidation to continue?

Even though Nifty began last week with Covid fever, the recovery was equally brilliant and by Friday, we are back to where we started. At an overall level, I can safely claim that my prediction of consolidation with a mix of red-green candles was correct (more details here). However, the manner of consolidation took me by surprise. I am sure it would have caused a lot of trouble for traders as well.

Now, here’s what I am looking at:

Nifty is clearly consolidating in a range, highlighted as yellow box. But since price is above averages, the bias is on the upside.

Thus, the following are scenarios for the week ahead…

ScenarioProbabilityAnticipated Price Action
ConsolidationHigh14550 to 15000
UptrendMediumIf breach above 15050ish; to rise till 15300ish
DowntrendMediumIf breach below 14500ish; to drop till 14200ish

I personally don’t think that the continual rise of covid cases over the weekend would cause a red opening since that factor was already accommodated last Monday. However, if states like Maharashtra impose lockdown, it can trigger selling. Let’s see 

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.

Apr21-W2: Time is money

Despite having taken hundreds risky trades, I did have butterflies in my stomach before taking the first relatively safe nifty trade of It may have been because of performance pressure since I did want the first week to not only be green, but meet the target CAGR of 15% also. And there’s my learning straightaway. The minute you start keeping expectations from a trade, your mind starts making wrong decisions.

The first trade should have been a no-brainer. Since market opened negative, selling calls was a sound option. But I had reasons to hold bias for uptrend (more details here). So instead of selling calls, I sold puts on the first sign of pullback. It did not take long for Nifty to break the swing low and I had to sell calls. The feeling of being stupid soon converted to panic as I saw loss of more than 400% on those puts. That’s my max stop loss limit.

But then the voice at back of mind said that the strategy was not only about being directionally correct, it is also about theta decay. Why not wait until 2:45 PM before booking loss? But then, what if Nifty falls more? Well, the intraday ADX seemed to be topping out. And so I decided to hold on. The decision somehow worked.

But then the same problem happened on Tuesday when I sold call options during the first 5 minutes of opening, thinking that it was going to be a repeat of Monday. The market rebounded sharply and those calls now needed help of theta decay again. Moreover, RBI meeting on Wednesday meant that option premiums were going to remain inflated. Luckily, Wednesday and Thursday brought the power of theta decay in full glory and the week was not only saved, I ended up earning more than target ROI (more details here).

All thanks to time!! Unfortunately, I have complete lack of it till end of month now. Even during these Covid times, my landlord is forcing me to change house while my office work is getting a bit hectic. Considering these factors and the relatively high monitoring that I had to do over the week, I have decided to pause trading till end of this month. It is ironic that I am pausing before even properly beginning but just like the week did not exactly go as per plan, life too does not work as per wishes.

Meanwhile, I shall continue to write views on Nifty and blog posts while also working on WordPress stuff. Nifty trading to be resumed when the time is right. After all, its all about time and timing anyway.

Apr21-W2: Beats estimates

As I review, I am now realizing that the market made a doji candle on the weekly timeframe. And all these days, I was wondering why there is so much volatility in the market. As the saying goes, don’t miss forest for the trees.

So the below are the 4 candles during which I took trades, with each day being completely contrary to what I was anticipating (more details here)

Anyhow, here are the results:

Net Profit (after deducting brokerage)Capital deployedWeek’s ROIAnnualized ROI
Rs. 4,000Rs. 6,40,0000.625%38.26%
Where annualized return = ((1+week’s return in decimal)^52)-1)*100

In honesty, the key reason for achieving higher return was sheer luck. Though I was expecting consolidation during the week, but the way it happened was baffling to me. My daily basis analysis backfired (more details here) and I had no choice but to sell options on both sides. Basically, theta decay saved the week. But then, that’s what the strategy is all about, isn’t it?

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice