Monthly Options portfolio October 2020

I did make a simulated options portfolio for October as well. I focused a lot more on some experimental strategies this month as compared to simple delta strategies of September. Also I apologize for not making a sheet as promised for ease of tracking of the positions instead of such screenshots. Hopefully I will get some time this series to make it. This is directly the update post like the last month. Since not all of this portfolio was built at a time, there was no point in writing a ‘Start of the month’ article. Also this time it is difficult to gauge maximum profit on portfolio since some of the strategies did not have a fixed maximum reward. So let’s get into it.

BIG DISCLAIMER - I may not have position in the strategies I post here due to margin reasons. Derivatives are the most risky instruments available to retail traders. Please do your own studies before taking any trades in the stock market. I will not be responsible for outcomes of these trades. I do not own any charts or data I share here. Everything is for educational purposes only. I assume you agree to the disclaimer if you continue reading this article. 

Banknifty Double calendar spread

So what is a double calendar spread? In short, you buy options in far expiry, 26th NOV in this case, and sell options in current expiry. Unique feature of this strategy is that you get positive theta, and positive vega. Meaning, you gain from theta decay AND you gain from rise in volatility. I think this strategy deserves a post of its own. So I will discuss the details separately.

Maruti Bull Put spread

This was a relatively simple strategy. Maruti has a good support around 7000. So when the stock came around that level, I initiated this spread. Since this strategy was initiated just a week before the expiry and 200 points out of the money, the premium was very low. But that also meant that theta decay would be rapid. For about 30 thousand rupees of margin, and about 6-7 days of holding period, this was a decent trade.

Wipro Bull Call Spread

This was one of trades that went horribly wrong both in this portfolio as well as my real money trading account. Results of Wipro were declared after market. A potential buyback was announced at 400rs. So without studying other numbers thoroughly, I took a bullish position in Wipro. Not only did it open gap down, it ended the series about 10 percent down from the results day. I did try to reduce the loss a little by booking profit in 370 CE and selling 360 CE making it into a Bear call spread.

Reliance call condor

This was another one of those experimental strategies I tried out this month. I did the same strategy in Cipla in my real account. I had initiated this strategy at the beginning of the month hoping that 2200 is the lowest RIL would go. It went much lower than that. Just like double calendars, call condors have some unique properties. I will write about it in a separate article. One thing I would like to point out that I booked out on 23rd of October when reliance was at 2100. Despite that the loss I incurred in this strategy was negligible. No it is not a bug or a manipulation, that is a feature of call condors.

Infosys call condor

This was a results day trade. Results trades are designed to take advantage of volatility crash after the results are announced. Traditional results trades are designed around short straddle strategy. I decided to give it a try with a call condor. About a week before expiry I decided to cover 1200 CE short call and short 1150 CE since it didn’t look like IT pack was in the mood to give a rally. This was one of the good trade, not just because of the profit but because the system worked.

Coal India bear call spread

Coal India looked very bearish after breaking and retesting 120. I initiated a bear call spread since I didn’t expect a further sharp down move neither did I expect Coal India to reclaim 120 levels. Those with a keen eye would recognize this trade as similar to the one taken in Eicher motors in the previous month. Entry was decent. But looking back at it, I do not remember why I exited out of this trade. The trade would have ended at maximum profit had I held on to it. This trade was worse than Wipro because I broke my system though the loss is smaller than that in Wipro.

Reliance box spread

Box spread is an arbitrage strategy. You enter into a vertical call spread and a vertical put spread or vice versa. Either one of the call spread or put spread will be a credit spread and the other will be the debit spread. Since the strike prices are same, the difference between credit and debit will be your profit. And theoretically, no matter what happens to the stock your profit will remain constant at expiry. I just wanted to check MTM fluctuation in this strategy. This is another one of those things about trading that looks easy but isn’t. I will write about this separately too.

In total the portfolio made about 17 thousand profit. Applying our deductions of about a thousand rupees per strategy, we still made about 10 thousand rupees on this. Though in this portfolio the capital used would be a lot less than previous month, we would still consider 10L as our investment. That makes the ROI for this month at 1%. This is significantly less than last month’s returns. It is also less than Nifty returns for the month which are around 3%. But we must keep in mind that after continuous reduction for 6 months since April, India VIX rose by almost 27%. That is a crazy increase in volatility. So despite the rise in volatility we managed to make some profit. That is what portfolio approach is all about.

Happy Trading.

P.S. – I had said in my previous monthly portfolio update article that I will post my trades on twitter. But it turned out to be a lot more tedious task than I thought it would be. So I don’t think I will be live tweeting all of my trades from now on. I may post some of the trades some of the times.

Monthly Options portfolio (SEP 2020) – Update

September was a good month for the positions. Though I closed a lot of positions within 10 days, some of them required adjustments and took some time before becoming profitable. I closed the last of my open position on previous Friday. Here’s a rundown of how everything went. (Also from next month, I will present everything in a better way than just uploading screenshots). In front of each strategy, I have entered (profit achieved/max profit) for reference.

Eicher Motors bull put spread (14,451/22,169)

No adjustments were required in this strategy as it was in profit from the day 1. Also This was the heaviest position from the margin allocation perspective. The thesis was to trade the support of 2100. As broader market started to show weakness I booked the position as we had already achieved about 60% of the max profit.

Tata Steel bear Call spread (3400/3910)

Tata Steel was moderately bearish when I entered in this strategy which became progressively more bearish as first the steel sector started correcting and then the news of TATA and SP separation came through. Keeping it open till expiry could have given us the remaining 500 rupees as well, but as I mentioned in the previous post, margins on the stock options are extremely high in the week of expiry, so if this was a real portfolio I would have received a margin call.

ITC short straddle (5248/40320)

This was the only strategy in this portfolio with potentially unlimited loss. The reason I still went through was because ITC usually doesn’t make violent moves, and there was plenty of time for the expiry to make adjustments. And I had to make one. In hindsight I could have done a better job at adjustments. As the market corrected, I covered 187.35 CE for a small profit and sold 190CE. Though the position ended in profit, it is little over 10% of maximum profit we could have made from this position.

Hindustan Uniliver bear call spread (3135/3765)

I like this stock and it didn’t feel right to short it at the time, technically it was very weak. We made most of the maximum profit on this one and I am happy it went the way I wanted it to.

Bank Nifty bear call spread-weekly (6267/6406)

It was a simple view which was right. I did not take any banknifty positions in the subsequent weeks, but doing so would have added to this profit by a lot since this whole month bank nifty had been extremely bearish.

TCS bull put spread (2700/2700)

The positive momentum in the IT space helped this position a lot. Instead of booking out completely I could have rolled up to puts to capture even more of the upside, At the time it didn’t seem worth it. But Note to self I guess.

ICICI Bank bear call spread (2818/3575)

Again one of the weak banks with relatively less volatility. Though banks like Indusind and RBL were weaker on charts, they are also more volatile than ICICI. So going with ICICI was a good call.

Reliance iron condor (616/4469)

This position didn’t go as planned. It was a range play in reliance. Another one of the trades which I didn’t manage very well. As the reliance broke the upper range, I booked out of the iron condor and initiated a bull put spread. What I should have done is only book out of calls and convert the condor into a bull put spread. very poor execution on my part here.

Nifty double calendar spread (12985/10672)

It is difficult to predict maximum profit of double calendar positions. When I initiated the position, the max profit was about 10k. But as I rolled the positions over to another week, I collected additional premium increasing the profit by a little. Another learning from this position is that your bought options should be at least 60 days away from expiry. I lost about half of the premium collected to theta in the bought options simply because they were too close to expiry. Another note to self. I am including a screenshot here so that you can see all the adjustments.

All in all, the max profit from the portfolio was about 90k. I managed to book about 50k out of it. Not a bad performance.

“But you entered the positions over the weekend over the weekend when the market was closed!”
-Yes, but on the following monday the portfolio was down about 2-3k which means entering on monday would have fetched better prices for the portfolio.

“This isn’t real. What about slippages and liquidity?”
-Even if you consider about 1-2k lost per position to slippages it still is a healthy profit.

I had assumed having 10L capital, but the portfolio only required about 6L which subsequently reduced I exited positions. So for the better part of the month most of the capital was unused. Considering all this, the returns out of this portfolio are not bad; in fact there is a lot of headroom to grow.

From Oct 2020 I will diversify the positions into cash segment as well. I will try to update the blog as much as possible. I will make a shared google sheet for anyone who wants to track it live. I will also be updating my positions regularly on twitter so follow me there at

Happy trading…

Monthly options portfolio (September – 2020)

Unless it wasn’t clear from my earlier posts, I like trading. I particularly enjoy how well options help you translate your market view into a trading strategy. So I figured why not share some of them here.

BIG DISCLAIMER - I may not have position in the strategies I post here due to margin reasons. Derivatives are the most risky instruments available to retail traders. Please do your own studies before taking any trades in the stock market. I will not be responsible for outcomes of these trades. I do not own any charts or data I share here. Everything is for educational purposes only. I assume you agree to the disclaimer if you continue reading this article. 

There will be some trading jargon in the discussion that follows. So here’s a short key for that:

  • Position – A position in a stock would consist of multiple option trades.
  • Trade – Entry or exit from an options contract.
  • ROI – Return On Investment
  • PoP – Probability of Profit

So there are some rules that I will follow while making these strategies:

  1. Maximum margin used will be 10 lacs.
    After SEBI’s new margin rules, required margins have reduced greatly risk defined strategies. Some of my strategies will be risk defined.
  2. Adjustments, i.e. additional trades, will be taken if any position has the potential to give losses.
    It might take additional margin and hence we will leave some margin unused at all times.
  3. Margin calculation will be done in the ‘India’s Best Trader’ tab of Zerodha Sensibul.
  4. PoP will take priority over ROI.
  5. Strategies will only be in the options which are liquid.
  6. Strategies on stock options will be in current month.
  7. Strategies can be initiated anytime except in the week monthly of expiry.
  8. Strategies targeted at events such as results, court hearings etc, will only be taken if at least twice as much free margin is available to manage any unexpected movements in stock.
  9. 5% of capital (i.e. 50,000) in the MTM loss on a closing basis will be the hard stop to exit any strategy.
  10. After 40-50% of the max profit is achieved, we will look to exit out of strategy depending upon stock movements.

I know these are a lot of rules. But trading without any is just asking for your account to be blown up. Another disclaimer would be that I have constructed this on a weekend so option premiums are according to the closing price on the Friday 4th September. When you track these tomorrow the premiums will be different. Idea isn’t to get the exact entry price but to have positions which will require minimum maintenance through the expiry. If the market moves against any of the positions I might add the adjustments done here. But don’t hold me to it. I will also do weekly expiry trading in BNF in my trading account which I may update separately.

Not all strategies will have explanations as some of them are pretty textbook.

This is part of the positions which will be added as the expiry comes near. All the positions will be converted to MIS on the day of expiry and I will do the expiry day trade.

This is a little complicated one and relies on volatility of the NIFTY remaining high through this weekend. So the next week long options will not lose too much premium to time decay and I will get to keep the premium from this weeks sold options.

So far we have used a little over 6 lacs for these 9 positions. I will update changes, if any, in the captions of those images. Also I will try to find a better way of putting such trades on the blog. Suggestions are welcome.

This is the first time I am putting some of my trades in public. Please do not blindly follow anything you see on the internet including this blog.

Happy trading…