Adjusting Option Positions

The infosys results was quite a surprise. I had played short strangle hoping that volatility rise will help to make a successful trade. However, I lost huge amount of money. Basically the trades were Square off ed by the broker.

Unfortunately one leg of the short strangle (2500 CE, 1 lot) is still open. Now the premium is nearly three times higher than the sold price.

What can I do to close the trade by minimizing the loss?

I have started this thread with the hope that some of our seniors will help people like me to learn how to adjust option positions when the trade goes against the plan.

If most of us shares our failures and get the advise from our seniors through this forum, we will learn and prepare for a better next move.

Thanking you in advance.
Regards
Monasona

Both legs should have been closed at a time , however u can convert the open position into BULL CALL SPREAD by buying 2400 call if you believe that still some up side is left for Infy. hope others will also provide some suggestion. Do not know why you preferred to SHORT before result

What did you make to think that vola has to rise<

You have to analyze that thoughts and not on any thing else.

You short options: VOLA HAS TO COME DOWN.

Thanks that you made a loss on that trade and I hope it is a big loss, so you will remember the next time you take any trade with the same thoughts before you take it.

Why< Because you not will take it again with that stupid thoughts. That is called: Learning by doing and I have done it many times. So move on and wait for your next positive experience and you can be sure it will come.

Good trading

DanPickUp

Thank you Sir for the valuable suggestions.

I have played short strangle as the Vola was high and hoped that before the results or after the result declarations vola will decrease and I will square off the positions.

But didn't think Infy will move beyond my position 2200 PE and 2500 CE.

Due to some personal problems I was away from the net for quite a long time Friday...and when returned I had no choice. As 2500 PE was near to Rs 1 so I decided to square off this leg first.

I could have square off at the same time the other leg 2500 CE... unfortunately I have waited hoping price will settle/go down and infy will close between 2500 - 2600.

It is one of the mistake that I had done....

Would you be kind to let me know when one can sell short strangle and at what situation he/she should square off the position.

Sir...have a great week ahead. Once again thanks for your guidance.

Regards

Dear Monasona

In trading you not can act on the hope thoughts. To many counterparts are around which play the game professionally and the sharks never play any game on the hope thoughts.

Do never ever forget that and set a stop loss for any trade you take, as your market not offers to many choices to recover losses. How to set that kind of stop loss is your choice, as I posted a few ways in my thread.

Playing short option strategies, specially in your limited offer market, is only to recommend to traders which are familiar with any details to what it takes to bring home such a strategy with profit.

The sharks also not care if you have any problem with your what ever and with who ever. The game is about making money and there are no what ever excuses to why losses happen. The once which toke your money on the other side do not care about that.

Loss is loss for us and loss because of any personal problem or connection problem or what so ever is a thanks giving moment for the sharks.

Final question: Do you like to feed the sharks< Think about it.

Good trading my friend

DanPickUp

I will always remember the following sentence:

Do never ever forget that and set a stop loss for any trade you take, as your market not offers to many choices to recover losses.

In my answer i wrote the real fact... and it was not an excuse.

I understand it is a straight fight...and either win or loss...nothing in between.

Sir please explain my last question...when to play short strangle and when to sq. off the same.

Regards

- Having enough money for your margin: 50,000 Rs

- Compare the historical vola for the last year and take the trade if you are on top of it. Compare other shares in the same segment to get a feeling how high the vola there is. This is the most and secure way for non pros like you. There are other ways, but to explain that to non pros does not make any sense. Start to search for shares which fill that criteria and you are on the road to make money.

- Be sure to know your break even points or levels on each side. If you do not know how to get those levels, do not trade short strangles, straddles or what ever you plan.

- Play through different volatility situations (plus and minus) to see where they are.

- Calculate your stop losses with that break even points and place your stop loss orders immediately after you implemented the trade.

Good trading

DanPickUp

Thank you for your suggestions.

There are other ways, but to explain that to non pros does not make any sense..didn't expect to have the above sentence...from people like you.

I am very much interested to learn options in depth. Thus kindly send more info( if possible) : subhojit0669 at gmail.com

Please don't misunderstand....I wrote my e-mail ID as the information/study material may be too big to write down here....

Regards

Hey man: You already complain before even thinking or even looking for what was posted.

There are always other ways to do a trade or search for any criteria. It is not my job to serve people here with what I do.

You got a very good way to make sure money by using what I posted, but you already complain and you are in no way a pro. If you would be, then you would not make such mistakes.

Thank you for the suggestions...

It doesn't matter whether i am a professional or not......

ultimate goal is to win.....

Regards