Another highest ever profit on a volatile expiry day. Booked profit of Rs.2,12,279/- on 14th May expiry trading, which is an ROI of 6%. This expiry expected to be volatile as it was just a day after FM detailed about the first cut of 20 lac crores Economy boosting package. Market opened at 9214 with 160 points gap down. Big gap downs need to be managed carefully as they mostly result in further continuous fall or steep recovery, and it was bit more complicated due to expected announcements about economy reforms everyday by FM after market hours.
So, waited for market to settle for first half an hour and noticed market did not fall continuously and started trading around 10 am. The key Support and Resistance levels i have identified for the day was 9450 and 9100. Started selling safe strikes 9050 PUTs for 1 rs premium and then 9100 CALLs for around 2.5 rs. Market started falling slowly for 1 hr upto 11:30 am and then stayed range bound with slight upmove until 1 pm. Sold 9400 CALLs (premium at 9450 was not attractive to maintain neutral) around 1.5 rs to maintain premium neutrality.
Market started falling continuously from 1 pm onwards, in fact NIFTY fell down by 115 points in 1 hr 20 mins time. By this time i had more PUTs sold with more premium on PUTs side compared to CALLs premium. Started defending my positions by selling 9300 CALLs with 1.5 to 1 rs premium, then 9250 CALLs with 1.6 rs premium. Now, my 9100 sold PUTs challenged me a lot as the premium started raising to 5, 6 and 7 rs. So, sold 9200 CALLs aggressively for a premium of 4.5 to 2 rs continuously to defend my 9100 PUTs. I was not panic as NIFTY did not breach the key support level of 9100 PUT that i have marked and also 9100 PUTs did not get in the money as well. Finally market took support at 9120 and then finally closed at 9143.
It was a tough one indeed, but managed well by defending aggressively. Gained good experience as well. Identification of key levels where market may not going is key and then deploying the Defending, Fire fighting and Adjustment techniques is equally important. Honestly speaking, the 6% ROI i made on this expiry mainly due to higher premium i sold at 9200 CALLs in defending 9100 PUTs. I generally aim for 1 to 2% ROI on expiry and am more than happy about such returns. This means 4 to 8% ROI in a month which extremely good returns by any mins with calculated risk. However, sometimes i take bit more risk when market is very quiet like on 7th May and sometimes i end up making more profits when i defend aggressively like on 14th May. One will learn and do all these as they gain experience in expiry trading. However, 1% ROI can be made by anybody by following simple rules and discipline.
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