Day: October 2, 2021

fireworks, pyrotechnics, new year

Sep21-W4: Make money while the VIX shines

While thinking on what I did right the past week, I realized that I made money primarily because of high India VIX. It obviously makes sense to do selling during such times. I wondered if I could use India VIX chart to my advantage.

Yes, I can. Like everything else, India VIX follows principles of mean reversion and on an appropriate timeframe, the stochastic is working beautifully. This is the key reason I was able to book a lot of profit on Thusday as VIX crashed and met the average.

Given the fact that Nifty has to eventually meet its averages on weekly timeframe, this is an important learning for the next few weeks. If Nifty is to correct, IndiaVIX will remain on the higher side. A closer tracking of India VIX charts can help in timing of selling the options.

During the beginning of my trading week i.e. September 27th, I could have sold some more lots. The opportunity struck once again on September 28th and this time, I completely missed the bus. This is despite the fact that I had made an absolutely right prediction about market movement.

I should not complain much as the past 3 weeks have been quite kind to me. I should stick to basics and perhaps, profit maximization objective can wait. The focus on capital preservation and consistency remains for now.

So my Tradingview now opens with charts for Nifty spot, Nifty future and India VIX. It may sound like a case of over-analysis but I believe this is actually the bare minimum. Fireworks work well in unison.

returns

Sep21-W5: I could have made more profits

Upon the open of 24 September, I sold a couple of near the money call options. My degree of confidence on mean reversion was high on daily timeframe but that is a bit of a higher timeframe for my kind of trades. I rely a lot on intra-day timeframes which were giving me mixed signals. I had put exit orders on both call options which eventually got executed leading to good profits.

History repeated itself on 27 September and it was again an opportune moment to send near the money call options. In fact, I should have taken higher number of lots. However, I had some office work and I knew I would not be able to actively track. By the time I started paying attention, market had already begun reversing and I had lost the edge. So I had to stick with OTM options.

Had I paid attention, I could have gained a lot more. Anyhow, my overall CAGR has hit an important milestone of 25%. I hope I am able to maintain it.

Here are the results:

Net Profit (after deducting brokerage)Capital deployed (approx)Week’s ROIAnnualized ROI for this weekTotal no. of weeks traded till todayAnnualized  return till today
Rs. 14451.92Rs. 7,82,9981.84%158.84%1625.1%

The following is breakdown of week’s positions:

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.