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 twitter.com/gandhar12.

Happy trading…

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