Trade gone wrong
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Ohh...the pain.
Yesterday,I bought a straddle.I bought it around 3:00 -3:15 hoping to avoid time decay.
I checked volatility ...it was way lower and hoping to rise in volatility.
I checked the market...and was hoping a for a big movement.
My idea was to hold to position till today 3:00 o'clock and delta neutralise the position.
Problem was I knew long straddle was statistically handicapped trade and works less times.after i bought the straddle....I read some more and panic started to creep in.
I knew Vega will drop the moment announcement is made and being vega long I may suffer.In reality vola drop down and jumped up as market continued to sell.
I gathered enough reading material and overnight convinced myself straddle won't work.
Now the expectation was if RBI cuts rate,market was going to go up,and if the RBI hold rate if will going to go down.
After few moments it was pointed out market already factored in 25 BPS rate cut and it won't move much.I was more convinced that my long straddle was wrong move.
Mistake.1 As the day opened people hoped market will go up expecting rate cut and I was biased and decided to not to short future.
2.As it opened market moved violent and went under and ITM call loose more value than my put gain.I was already biased that my strategy was wrong and in panic I closed the position taking a small loss.
As RBI did cut the rate my idea was market will go up.thats why I was hesitant to short future and delta neutralize which would have effectively made it delta negative by small amount.
Now what the market did was beyond my expectation.It moved downward so violently that if I had hold the position even with out neutralizing delta it would have given me Profit.As the market went more than 2 % down the put gained more value than what call lost.So the loss which was around - Rs.2000 converted to gains of few hundred as I write.
What I have realised that I bought more lots than what I was comfortable with and that prompted me take a small loss.But in less lot commission is higher.
My overthinking is killing me.
---------------------
Ohh...the pain.
Yesterday,I bought a straddle.I bought it around 3:00 -3:15 hoping to avoid time decay.
I checked volatility ...it was way lower and hoping to rise in volatility.
I checked the market...and was hoping a for a big movement.
My idea was to hold to position till today 3:00 o'clock and delta neutralise the position.
Problem was I knew long straddle was statistically handicapped trade and works less times.after i bought the straddle....I read some more and panic started to creep in.
I knew Vega will drop the moment announcement is made and being vega long I may suffer.In reality vola drop down and jumped up as market continued to sell.
I gathered enough reading material and overnight convinced myself straddle won't work.
Now the expectation was if RBI cuts rate,market was going to go up,and if the RBI hold rate if will going to go down.
After few moments it was pointed out market already factored in 25 BPS rate cut and it won't move much.I was more convinced that my long straddle was wrong move.
Mistake.1 As the day opened people hoped market will go up expecting rate cut and I was biased and decided to not to short future.
2.As it opened market moved violent and went under and ITM call loose more value than my put gain.I was already biased that my strategy was wrong and in panic I closed the position taking a small loss.
As RBI did cut the rate my idea was market will go up.thats why I was hesitant to short future and delta neutralize which would have effectively made it delta negative by small amount.
Now what the market did was beyond my expectation.It moved downward so violently that if I had hold the position even with out neutralizing delta it would have given me Profit.As the market went more than 2 % down the put gained more value than what call lost.So the loss which was around - Rs.2000 converted to gains of few hundred as I write.
What I have realised that I bought more lots than what I was comfortable with and that prompted me take a small loss.But in less lot commission is higher.
My overthinking is killing me.
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