PROFITABLE TRADING STRATEGY IN VOLATILE TIMES FOR SMALL INVESTORS PART-1 : WWW.ASHOKSHARMA.CO.CC
Market now a day becomes so volatile with both way move which is so swift that even seasoned investors also caught in the wrong side of the trade. But markets are market must have volatility and move. In order to make money one has to ride the move. We often try to predict the move and proved wrong most of the time.
One better way to change the way you trade. Option trading will be one tool to play safe. Worldwide hedge funds and HNIS’ make huge profit in option trading. For example huge build up do0ne by FIIS in 4900 call. See the results the option premium came down from 135 to 0 at the close. Huge profit in a matter of 24 hours
But small investors’ do not understand the pros and cons of option trading. Sometimes their bad experience with options trading make them think against this.
If you believe in my little wisdom gained over past 22 years, small investors can make huge money in option trading. But one has to learn the golden rules of option trading.
- Generally a small investor buys a option suppose at 5 ,when it becomes 6 or 7 he immediately sells it, but never sells when it becomes 3, even wait for last minutes on the expiry day hoping some miracle to happen, thereby losing his entire investment.
- More money can be made not buying, but in selling option, but for that you have to master yourself with some basic principles
- Normal stop-loss theory will not work in case of option. It depends on the value of underlying and the days left in expiry.
- Buying and selling options at right price is very important as there is no much liquidity in most of time, so premiums are arbitrary, generally fixed to take small investors for a ride. For example we advised to buy SAIL 220 call only at Rs 1 .80 on and applied stop of Rs 0.90.it zoomed to Rs 6.30 booked at 5.40, huge 200% return in 24 hours. But the most important thing your total investment is only 2430 and gain 4860. The maximum loss in case of stop would be 1215 only. You can buy as much lots as per your capital and risk appetite.
- Never buy options when a News broke by so called BREAKING NEWS on television, as premiums are jacked up much before releasing the news.
- Never invest your whole investible fund in one option call hoping to multiply your capital overnight, as risk is equally high.
- Make disciplined investment in options at regular intervals with a little diversification.
Hence the moral of the story big money can be made with small capital in safest way of option trading
HAPPY INVESTING