Hrkg’s Weblog

After a long bear-run the market has suddenly shown a kind of uptrend now. The important point is how long this trend would continue in the backdrop of a global, especially US, economic scenario which does not seem to be comfortable yet. One certainly needs to trade caution as of now.

Of late, I have been trading primarily in options to minimize my investment exposure to the market, limiting potential losses and also to have a greater leverage with an expectation of greater profits. Call it lure or whatever. It is the lure of having some reasonable profits that keeps me going in this arena. Since I am relatively inexperienced, so far as market technicalities or investment ideas are concerned, I try to get the pulse of the market from various websites, TV channels etc.

I have incurred substantial losses in futures and options and as of now have abandoned trading in futures to minimize the risks in current situation. My experience in option trading tells me that unless one is an expert in the field or is very sure of the trend trading in option without hedging is quite dicey. Hence, nowadays I am carrying hedged positions only.

Las week I took few positions in options keeping in mind the probabilities for the next week which I gathered from various sources seemingly having some technical expertise. At the moment I am keeping my fingers crosses and can’t do much but wait and see the results when market comes to life next week. Of the positions, few are cheap call options for the month of November and one put option for the same month to hedge the call positions. Basically I am expecting some bullishness to be followed by profit bookings. What is worrying me is my position in put options for this month as expiry is round the corner. There is a good chance that I could come a cropper in this position. In that case, I will have to try to compensate this limited yet probable loss in my positions for the coming month as I am shy of trading in this month’s options as of now keeping in view of my financial muscles.

What happens in reality would however be obvious in the coming week only. Let’s see.