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 wannabebull.com. 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.