HDFC Bank - Options Strategy Executed in my Account -- Outcome
HDFC BANK - OPTIONS STRATEGY EXECUTED IN MY ACCOUNT --OUTCOME
Lessons:
Even though the max loss was only 4500, I ended up registering almost 4 times the loss.
This indicates that there is no fixed risk thing in trading especially when exiting a trade is an issue.
My view on the scrip and the Bull CE spread was a hit as HDFC Bank hit a high of 1725 on 18-10-21.
When I looked at the spot, I checked the Strategy PNL and it was giving me close 5600-5700 gain.
So without much thinking, I exited the Short Call as that is the SOP.
The exit was almost immediate and I was happy as the liquidity was in place which is a must for exits.
My intended exit was at 81 when the Long CE was around 93. However, I had to make one adjustment to exit the Short CE.
By this time, the price had started the free fall.
The next I did was I placed an order at 81 as that is where the last trade was made.
I was unsuccessful as the premium fell further. I placed another Limit Sell Order at 77, 74, 71, and 67 but of no use.
None of my orders got executed and I was already in a loss by then.
HDFC Bank then started recovering and I held on to the Long CE - "In the Hope of it giving me at least a modest gain".
I held on to the CE only because the EOD prices were higher than the day low.
Even when Nifty fell on 20-10-21, this Option was doing alright and it appeared that I may be able to get a break-even exit.
Even on 21-10-21, there was no issue as such but then as Nifty was recovering, HDFC Bank started to fall.
This drove the premium down sharply and I had to make a tough call to place a Limit Sell Order at the Bid price to get "rid" of the CE.
On 18-10-21 itself, I had tried to exit at the market price, but Zerodha did not allow stating that it is an illiquid option.
So I learned very expensive lessons on the strategy.
I have been quite successful in executing strategies so far. This trade was taken by me after a gap of 9 months.
This trade was done with the results and I have till now not done such a trade. So I guess, I paid the price for it.
In hindsight, so many things could have been done. However, I have presented to you the reality as it hit my PNL.
With this dent, I am in no mood to take a real trade related to results-based Option Strategies.
I will now do a better job when Q3 results are announced in Jan 2022.
And as if what I endured was not enough, come Friday the 22-10-21 and HDFC Bank shot up to 1708 and the corresponding high of the CE that I was struggling to exit was 88!!
So I was hit for not being able to hold on to a position for one more night and by 35*550 = 19250INR.
This means I would have banked around 3K gains.
All this is the 20/20 vision in hindsight and what happened was like - the water down the bridge. I can only keep learning and improving.
What do you feel about this? How you would have handled this situation?
Please share your thoughts as I am all ears and eyes open to learn and understand different perspectives.
I wish you greater success in trading!
Umesh
23-10-21
Lessons:
Even though the max loss was only 4500, I ended up registering almost 4 times the loss.
This indicates that there is no fixed risk thing in trading especially when exiting a trade is an issue.
My view on the scrip and the Bull CE spread was a hit as HDFC Bank hit a high of 1725 on 18-10-21.
When I looked at the spot, I checked the Strategy PNL and it was giving me close 5600-5700 gain.
So without much thinking, I exited the Short Call as that is the SOP.
The exit was almost immediate and I was happy as the liquidity was in place which is a must for exits.
My intended exit was at 81 when the Long CE was around 93. However, I had to make one adjustment to exit the Short CE.
By this time, the price had started the free fall.
The next I did was I placed an order at 81 as that is where the last trade was made.
I was unsuccessful as the premium fell further. I placed another Limit Sell Order at 77, 74, 71, and 67 but of no use.
None of my orders got executed and I was already in a loss by then.
HDFC Bank then started recovering and I held on to the Long CE - "In the Hope of it giving me at least a modest gain".
I held on to the CE only because the EOD prices were higher than the day low.
Even when Nifty fell on 20-10-21, this Option was doing alright and it appeared that I may be able to get a break-even exit.
Even on 21-10-21, there was no issue as such but then as Nifty was recovering, HDFC Bank started to fall.
This drove the premium down sharply and I had to make a tough call to place a Limit Sell Order at the Bid price to get "rid" of the CE.
On 18-10-21 itself, I had tried to exit at the market price, but Zerodha did not allow stating that it is an illiquid option.
So I learned very expensive lessons on the strategy.
I have been quite successful in executing strategies so far. This trade was taken by me after a gap of 9 months.
This trade was done with the results and I have till now not done such a trade. So I guess, I paid the price for it.
In hindsight, so many things could have been done. However, I have presented to you the reality as it hit my PNL.
With this dent, I am in no mood to take a real trade related to results-based Option Strategies.
I will now do a better job when Q3 results are announced in Jan 2022.
And as if what I endured was not enough, come Friday the 22-10-21 and HDFC Bank shot up to 1708 and the corresponding high of the CE that I was struggling to exit was 88!!
So I was hit for not being able to hold on to a position for one more night and by 35*550 = 19250INR.
This means I would have banked around 3K gains.
All this is the 20/20 vision in hindsight and what happened was like - the water down the bridge. I can only keep learning and improving.
What do you feel about this? How you would have handled this situation?
Please share your thoughts as I am all ears and eyes open to learn and understand different perspectives.
I wish you greater success in trading!
Umesh
23-10-21
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.