My Bank Nifty Options trading diary

pannet1

Well-Known Member
#1
Hi,

I started to trade Options this month with Kotak Securities.

Capital: Rs 30,000
System: Vertical Spread based on Break out of underlying on Weekly Timeframe.
Instrument: Bank Nifty and any other that fits within the Capital
Previous experience: Currency and Commodity
Note: Reason to trade Option is I can wait for that one trade in a month to earn 100-200 points
 

pannet1

Well-Known Member
#2
Trade 1

I decided to trade other Equities too if they are within my capital. I saw there is Bearish Breakout opportunity at the beginning of the Week. So I advised the sub-broker to take a bearish credit spread (Buy higher strike Call and Sell lower strike Call). But market gaped down and I was hurrying with my phone trade instruction.

This is when I realised my capital is not enough to take the other SELL position in ITC 24Sep expiry contract. Luckily for me ITC climbed up and my naked position made a 10 point profit. ITC actually climbed several points on its bullish run for the next 2 days but the point is I was wrong in my view and still made money.
 

pannet1

Well-Known Member
#3
Trade 2

After the experience with ITC, I realised that my capital is not enough to trade many Stock Options. So i decided to stick with Bank Nifty until and unless I grow my capital. The important lesson learned here is not to trade when it gaps below or above the trigger price.

Bank Nifty 29-OCT expiry Bearish Credit Spreads

The weekly chart was about to made a bearish breakout late in the afternoon trading session

28-Sep
Long 17200 CE @ -549.00
I wanted to short 17000 CE @ lower strike that's when I realised I did not have enough margin. The market was closing and I did not have enough time to fund my trading account with another Rs 15,000.

So I scrambled for the funds during the night of 28-Sep and then transfered funds from Kotak Securities website from the Bank.

29-Sep (50 point RBI rate cut day)
The next day Bank Nifty gaped down below my intended Sell strike price of 17000 at 16800. So I decided to short 16800 strike price instead of the 17000. This is then I realised Kotak securities did not take into account he money transfer i did the previous day automatically and needs a manual intervention WTF.

Its inevitable that I need to enter into damage control. :annoyed:

Short 16800 CE @ +600.05
This when the price climbed backed to the previous day close. So I made the following trades.

covered 17200 CE @ +642
Long 17400 CE @ -521.30
30-Sep

price made a short up move till the high of the previous day and started to climb down

covered 16800 CE @ -820
short 17000 CE @ +699
 

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pannet1

Well-Known Member
#5
If you know TA, why expensive broker like kotak securities? Get a discount broker. You will save hell of a money.
Yes, that's right. The sub broker is my friend. So he earns half of the brokerage besides I can make trades by making phone call. However, I understand that Zerodha (9%) needs lesser margin than Kotak (10%) in general and Bank Nifty in particular. Is it true?
 

pannet1

Well-Known Member
#6
Oouch. I made a blunder.

I thought I told my broker to cover the Short Call @17000 strike price and again Short Call @ 17100 strike price, thereby effectively reduce the spread. But what happened was by mistake I told to Sell Call @ 16100 strike thereby my spread widened by 17400-16100 (1200 points).

Will the markets ever show mercy to traders who do mistake. My guess is its rare. :annoyed:

30-Sep
Covered 17000 Call (-620)
Shorted 16100 Call (+1002)
To add fuel to fire this short call at 16100 is selling at a very low premium so i was unable to get out of it immediately. If I buy it back I would have lost 500 points straight away.
 

pannet1

Well-Known Member
#8
:clap:

For the question will markets show mercy for traders who make mistakes. The answer is no. Market gaped up making the Sell Call option even more difficult to rescue.
Killed 16100 SELL Call option for a loss of 1000 Rupees making the total loss to near about 25000. It will take several months for me to recoup the loss and get back to feet.

See you later.
 

bunti_k23

Well-Known Member
#9
:( account lost within 8 days.....unbelievable ,was there a complete system in place to trade ???
 

pannet1

Well-Known Member
#10
:( account lost within 8 days.....unbelievable ,was there a complete system in place to trade ???
Hi Bunti,

Many thanks for the concern. As I described above when I informed my broker to make a trade by mistake I took 1000 strikes below what was intended. That spelled the doom. Not a system failure.

Also one should have enough margin to trade. Atleast double than what is recommended.
 

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