Nifty Oct Put @ 4600

I bought around 5400 shares when it was 20 rs. Now the current price is 6 rs. I would like to know shall i hold it for few more day or to sell at current price. Kindly advice

Srishta

I am posting below an extract from Curtis Faith's book Way of the Turtle. I hope it helps.

People who are affected by loss aversion have an absolute preference
for avoiding losses rather than acquiring gains. For most people, losing $100 is not the same as not winning $100. However, from a rational point of view the two things are the same: They both rep-
resent a net negative change of $100. Research has suggested that losses can have as much as twice the psychological power of gains.
In terms of trading, loss aversion affects one’s ability to follow mechanical trading systems because the losses incurred in following a system are felt more strongly than are the potential winnings from using that system. People feel the pain of losing much more strongly
when they follow rules than they do when they incur the same losses from a missed opportunity or by ignoring the rules of the system. Thus, a $10,000 loss is felt as strongly as a $20,000 missed opportunity.
In business, sunk costs are costs that already have been incurred and cannot be recovered. For example, an investment that already has been spent on research for a new technology is a sunk cost. The sunk cost effect is the tendency for people to consider the amount of money that already has been spent—the sunk costs—when making decisions.

How does this phenomenon influence trading? Consider the typical new trader who initiated a trade with the expectation of winning $2,000. At the time the trade first was entered, he decided that
he would exit the position if the price dropped to the point where a $1,000 loss would be incurred. After a few days, the trade’s position is at a $500 loss. A few more days pass and the loss grows to
over $1,000: More than 10 percent of the trading account. The value of that account has dropped from $10,000 to less than $9,000.
This also happens to be the point where the trader previously decided to exit. Consider how cognitive biases might affect the decision whether to keep true to the prior commitment to get out at a $1,000 loss or to keep holding the position. Loss aversion makes it extremely
painful for the trader to consider exiting the position because that would make the loss permanent. As long as he does not exit, he believes there is a chance that the market will come back and turn
the loss into a win. The sunk cost effect makes the decision not one of deciding what the market is likely to do in the future but one of finding ways to avoid wasting the $1,000 that already has been spent on the trade. So, the new trader continues to hold the position not because of what he believes the market is likely to do but because he does not want to take a loss and waste that $1,000. What will he do when the price drops even more and the loss increases to $2,000?
Rational thought dictates that he will exit. Regardless of his earlier assumption about the market, the market clearly is telling him that he was wrong, since it is far past the point at which he originally decided to exit. Unfortunately, both biases are even stronger at this point. The loss he wishes to avoid is now larger and even more painful to consider. For many, this kind of behavior will continue until the trader loses all his money or finally panics and exits with a loss of 30 to 50 percent of his account, perhaps three to five times what he had planned.

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