nifty 4200 call trouble

#1
Hello everybody,
My name is Pratik. I am a newbie into options.
I have been investing a small amount in nifty option, i.e. call or put with the lot size of 50.
On June 27th Friday I had bought 2 lots of nifty call 4200 at the last trading price of Rs 150 per lot. At that time nifty index was 4144.

Unfortunately just after that the market plummeted and the last trade price of my 2 lots had gone down to 50 and now it is around 30.
I have bought 2 more lots @ rs25 to average the cost and hope that it the markets increases a bit.
My questions are:
Should I average it more and buy 2 or 4 more lots at a price lower than 20?
What re your suggestions?
Thanking You
Yours sincerely
Pratik
 

nareshch

Active Member
#2
Hello everybody,
My name is Pratik. I am a newbie into options.
I have been investing a small amount in nifty option, i.e. call or put with the lot size of 50.
On June 27th Friday I had bought 2 lots of nifty call 4200 at the last trading price of Rs 150 per lot. At that time nifty index was 4144.

Unfortunately just after that the market plummeted and the last trade price of my 2 lots had gone down to 50 and now it is around 30.
I have bought 2 more lots @ rs25 to average the cost and hope that it the markets increases a bit.
My questions are:
Should I average it more and buy 2 or 4 more lots at a price lower than 20?
What re your suggestions?
Thanking You
Yours sincerely
Pratik

You were near breakeven today .
But , My sincere advice is not to average a loosing trade . While averaging , w are not only risking more money in loosing trade but also ignoring other opportunities.

Naresh
 
#3
Hello,
Thanks a lot for replying.
Yeah you are right I was near breakeven today. And with this horrifying experience I have realized never to average and invest the money in other opportunities and deduct my loses against profit via new investments.
What are views about the market on Monday, i.e, 21/07/08?
Should I book profit or w8 till 22nd July for the government to change the market?
I have heard that if government falls then market will fall and if government stays then it will rise significantly?
 

AW10

Well-Known Member
#4
If you are still holding the options then you might be lucky this time. Though you made typical trading mistake of "Averaging the Looser" but market has given you a chance. We might see a good rally as govt is safe now, so you might be a winner.

Happy Trading.
 
#5
Hello,
Yeah you are right.
Market gave me chance and I blew it.
I sold all 4 lots 20th July itself @ Rs105 :eek: against the average cost of Rs 87.5.
Currently the price is Rs 250 , anyway I dont regret it as anything could have happened and conclusively my money is safe.
BTW I have bought 2 lots of nifty 4200 put option for Rs 28 and 2 lots of nifty 4300 put option for Rs 43. Is that a good decision seeing as there is only 8 days left for the July option to expire ?
 

AW10

Well-Known Member
#6
Hello,
Yeah you are right.
Market gave me chance and I blew it.
I sold all 4 lots 20th July itself @ Rs105 :eek: against the average cost of Rs 87.5.
Currently the price is Rs 250 , anyway I dont regret it as anything could have happened and conclusively my money is safe.
BTW I have bought 2 lots of nifty 4200 put option for Rs 28 and 2 lots of nifty 4300 put option for Rs 43. Is that a good decision seeing as there is only 8 days left for the July option to expire ?
Good decision or not ? that depends on your anlaysis of the NIFTY level in next 8 days.
both puts are OTM now. Near expiry, OTM options loose value faster then ITM options (if you look at option risk graph, then fall is almost vertical near the expiry).

So it is trade-off of the amount of loss in time value due to time decay every day and the amount of gain in intrinsic value of option due to drop in NIFTY. As of today, both options have 0 intrinsic value (as they OTM) and the price that you have paid is 100% towards time premium.

In my view, we are in bear market, and NIFTY has already moved 650 to 700 points, so it might be the time for a break. (already near 50 dma and downward sloping Trendline). So keep close eye on the price movement and trade as per your plan.

Happy Trading
 
#7
Hello,
Yeah you are right.
Market gave me chance and I blew it.
I sold all 4 lots 20th July itself @ Rs105 :eek: against the average cost of Rs 87.5.
Currently the price is Rs 250 , anyway I dont regret it as anything could have happened and conclusively my money is safe.
BTW I have bought 2 lots of nifty 4200 put option for Rs 28 and 2 lots of nifty 4300 put option for Rs 43. Is that a good decision seeing as there is only 8 days left for the July option to expire ?
lucky man! got reward on lossing trade:)...but plzzz dont repeat this mistake again.because nobody is lucky all the time...never average a loosing trade....
 

Similar threads