Month: January 2022

Jan21-W2: Sensible trading and high VIX always helps

With market all set to go long, I had nothing but put options. As Thursday came near, I kept some call options as well which helped in giving good returns. These kinds of weeks make it feel good. Small money made safely is always better than making large money with a lot of risk.

So I traversed through the following candles during the week:

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.14,691.5Rs. 1162758.951.26%92.11%3174.74%

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.

Jan21W1 ROI

Jan21-W1: The means don’t justify ends

Overconfident of mean reversion tactics and filled with greed to recover ridiculous penalty due to SEBI’s shenanigans of last week, I entered the mean reversion trade early. I think it was Tuesday. The trade backfired and I was in deep red.

It was not like I was completely off the mark. On Wednesday morning, I did get a chance to exit almost at breakeven but emotions overcame reasoning. I did not book and watched the trade go back in deep red within rapid fire time.

I knew that the same strike of 17850 CE would not be able to recover by Thursday. I went in by another 50 points and shifted to 17800 CE. I prayed on Wednesday night and Thursday morning luckily opened with a gap down opening. Though the overall profit was good but witnessing a realized loss of Rs. 1.25 lakhs is simply unjustified.

In future, I should exit when breakeven and switch to safer strike until mean reversion target is met.

So I traversed through the following candles during the week:

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. 71,856.3Rs. 1090902.656.58%2658%3075.04%

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.

ROI

Dec21-W5: Retail traders are looted by regulator

In a week when everything went right and I earned well via a methodical system of trading, I had to shell out a hefty amount of ‘other charges’ These are charges collected by dear regulator SEBI for penalizing retail traders like me who do not maintain lakhs of margin. To add salt to injury, it is impossible to know breakdown of these charges, at least on the console of Zerodha.

Rs. 15,000 of profit in the week was knocked away by Rs. 10,000 of SEBI charges. I have no interest in knowing the breakdown anyway. I know the reason. This is my punishment for being over smart and keeping negative margin on Dec 17th. I thought that as long as I maintain positive margin by end of day, I am ok. However, our dear SEBI can randomly take snapshots 5 times a day and penalize if margin is negative.

Did I deserve to be penalized? Yes

Did I deserve a penalty of Rs. 10,000? Absolutely no

I say this because we Indians perhaps pay the largest taxes in the world for trading in a market where freak trades are becoming common and price determination is done by speculators sitting in Singapore. SEBI has no right to penalize me by this much amount if I committed this mistake for the first time, especially when it can change margin requirements 5 times a day as per its whims and fancies. Couldn’t I had been let go with a warning?

But as always, nobody will care. This piece of blog will just die, just like hopes of several Indian traders who wish for reduced taxes and penalties.

I guess once I become rich enough, I too will trade from Singapore.

So I traversed through the following candles during the week:

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. 5327.98Rs. 1085574.670.49%28.99%2952.62%

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.

Jan22 W2

Jan22-W2: Nifty to create double top? (Jan3 to Jan7)

What I said last week was ‘Even if Nifty manages to break above red line, it may not be possible to maintain uptrend.’ I couldn’t be more wrong as Nifty went all greens blazing in a solid breakout above 17650.

Now the following is my analysis for coming week based on what I am looking at (You may want to open image in new tab or save it for better view)

This week is expected to swing both ways. I see Nifty as trapped between my red and green rectangles. It may not be possible to maintain uptrend. There is high probability that Nifty may break its recent high above 17945 but only to create a double top and correct subsequently.

Scenarios for the week ahead (highlighted as yellow box with red and green lines dissecting scenarios)…

ScenarioAnticipated Price Action
ConsolidationBetween 18100 and 17525
DowntrendIf breach below 17525; to drop somewhere till 17050
UptrendIf breach above 18100; to rise somewhere till 18500

I am really scared this time from Covid as I am not taking enough precautions. Is Nifty too behaving in same way?

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.

Dec21W4 ROI

Dec21-W4: The fallacy of the plan got exposed

Monday was the day when all my loopholes of mean reversion strategy were exposed. The strategy which had been giving me windfall profits for past 13 weeks or so was almost showing me an unrealized loss of over Rs. 1,00,000. I need to write my experience clearly as it happened on Monday:

TimeWhat I didWhat I should have done
First 15 minutesI knew that Nifty was not oversold yet on shorter timeframe but I still went ahead and did averaging since my P&L of put positions was deep redI should have rolled in the call options without disturbing put options
Next 15 minutesI purchased hedge positions which were expensiveI should have exited calls and averaged puts
Until 1015 amI exited hedges to save losses on them but that made my margin go negativeI should have taken hedges with intent to avg a bit more and exit hedges immediately
Until 1145 amI rolled in put options until then went ITM while ensuring that new premium > current premiumI should have rolled in only once while ensuring new premium > current premium
Until 1245 amHopelessnessI should have repeated the cycle until contracts went ITM

The chink in armor of my mean reversion strategy is that hedges are simply useless if this strategy is being leveraged on any day before Wednesday (or maybe Tuesday, will need to check).

By God’s grace, market started reversing by 1 pm and I was able to hold my nerve until around 2 pm when I eventually exited my positions and ended the day at around Rs. 20,000 of realized loss. However, I was holding positions which if kept till expiry could have recovered the loss completely.

This was easier said than done though.  During subsequent days, the market’s ATR was big and it kept swinging here and there but mostly in positive direction. I had to wipe the slate clean multiple times, meaning that I wasn’t gaining much.

It was only on Thursday that I got a chance to do another mean reversion when I sold ITM contracts to the tilt while keeping hedges. While I did earn profit, I could have milked more by rolling out the strike with same number of positions. The idea simply didn’t strike me then. I now need to remember that Wednesday and Thursday are golden days of mean reversion, if done properly.

All above has led to awesome learning. I had been taking this strategy casually which I can’t afford to do so anymore.

So I traversed through the following candles during the week:

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. 6870.59Rs. 1058414.71%67.83%2756.21%

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.

Dec21W3 ROI

Dec21-W3: The pleasure of doing nothing at all


The whole week was quite normal though there was a bearish tone to it. I had to do a mean reversion once but other than that, the strikes took care on their own. Since I did not do anything unlike other weeks, there is nothing much to write about. This makes my blog so simple. Keeping it simple is the most beautiful thing in life  

So I traversed through the following candles during the week:

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. 10397.8Rs. 1058414.70.98%66.25%2756.13%

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.

W1Jan22 Nifty

Jan22-W1: Nifty can’t help but consolidate? (Jan3 to Jan7)

What I said last week was ‘As the market is rising back with a vengeance after the previous 2-3 weeks of downtrend, it will be difficult for bears to stop its momentum.’ I was right as most of the week was a minor bullish trend.

Now the following is my analysis for coming week based on what I am looking at (You may want to open image in new tab or save it for better view)

This week is expected to swing both ways. I see Nifty as trapped between my red and green lines. Even if Nifty manages to break above red line, it may not be possible to maintain uptrend. At the same time, there is too much price action around 17100 levels for Nifty to fall like a knife. Thus, I expect a boring consolidation during this first week of new year.  

Scenarios for the week ahead (highlighted as yellow box with red and green lines dissecting scenarios)…

ScenarioAnticipated Price Action
ConsolidationBetween 17650 and 17050
DowntrendIf breach below 17050; to drop somewhere till 16500
UptrendIf breach above 17650; to rise somewhere till 18050

Hope year 2022 remains a boring one for all including Nifty. There has been too much volatility in previous 2 years and at least I can’t stand so many events in so little time. Let there be healing, for the world and for my P&L.  

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.