Hrkg’s Weblog

In my last post I discussed about my positions in various Call & Put options in the form of straddles. As expected, I have now got some values in the put options which I squared off recently. As planned, the profits generated by these positions have fully taken care of the costs of all my remaining call (long) positions. Expectations have no limits however. Even though these puts yielded good returns, I wished I had waited for some more time, as these soared by another 25% or so after I hurried to book profits. Given the current gloomy scenario, I don’t expect anything substantial from the remaining positions. In fact, I would have to book most of these in losses. What relieve me are the facts that now I am sitting on some positions which have already been rendered absolutely free of cost to me and thus making me tension-free and also that whatever I get from these positions would be a net profit, the possibility of any loss having been eliminated already. Hence, in view of the ongoing dismal state, my plan would be to square off these positions at the very first opportunity and not letting these expire worthless in the expectation of a miraculous turn-around. And in the event of such a turn-around happening, the possibility of which can not be denied totally, this small tactic could turn out to be a real money spinner and could be termed as a grand success. A remote possibility of the same is alive at no extra cost to me.

I am now kind of charged-up after a reasonable success on the above said positions so far. I have also been trading in derivatives almost in daily basis without risking any substantial capital exposure as, first of all, I can’t afford to do so and secondly, I still recon myself as a novice in this arena. Now, my next major step would be to take advantage of the situation and have some fresh positions in comparatively cheaper call options for the month of December. By doing so I would again be investing a small amount in the expectation of a healthy return. That is because I expect the market to scale some good height within these three months which, after all, is not a very short duration. Besides, the speculation is rife that the market is probably nearing the bottom if not already in the bottom. Hence, I am sort of tempted to take this calculated risk without committing any substantial amount. However, on this occasion I am not planning to have an equal counter position as a cover as I did on the last. All I might go for could be a couple of puts at the most. The reason is the one that has already been mentioned, i.e. the market could already be nearing the bottom. Also, some positive measures are being taken by the regulating agencies to mitigate the sordid state of affairs. I foresee some positive impacts of all these at least in the near term. I will keep my fingers crossed once again and then hope for the best. 

Note:  Recently I received a comment from www.knowyourprofit.com team who is bullish on power sector stocks because of the progress in the Indo-US nuclear deal. Even as I am writing this post, positive news are pouring in about P-Notes, RBI cutting CRR by 50-basis point etc. All these are expected to boost the overall sentiments in the Indian markets for the time being and the rate cut should take the financial stocks for a rally at least for a short term. Nevertheless, nothing can be taken for sure in the current situation.