Stuck in a trade, any help welcome

M

marinemonk

I trade index options on the Indian CNX Nifty Index (Bloomberg NIFTY:IND). Two weeks ago, with the Index at around 5300, I had sold 5800 calls expiring on the 26th of September. I did not sell the corresponding puts immediately as the market had run up over the past two days and I thought I could get a better rate if I waited. Since then, the market has run up some 11% and is trading at 5900. Two days ago, at around 5750, I bought back the 5800 September calls and sold the same number of 6000 October calls (expiring 31st October). Since then the price of the October calls has almost doubled and I'm staring at a big hole.

Would appreciate any ideas on how to get myself out of this mess
:( :confused:
 
Depends how you feel about the trade. If you were only trying to sell calls and sell puts at approximately the same time, you should exit the trade and take your losses. Also, your strategy seems flawed (and way too risky) from the beginning. Why not buy butterflies instead of what you had planned?

When you are wrong it is best to get out asap rather than hope. If hope is your exit strategy, you are usually looking at a big loss.
 
Quote from newwurldmn:

Close the trades and move on.

Money lost is money lost.
More...

The best traders operate a system (even if the "system" is you), they have a target for a loss (technical point, $ value, etc), and when that point is hit they exit. Losses that are undefined have the potential to turn really nasty.

The fact that you have turned to a forum of strangers suggests that simply exiting and clearing your head will be the best play for you.

Best,
 
Quote from marinemonk:

I trade index options on the Indian CNX Nifty Index (Bloomberg NIFTY:IND). Two weeks ago, with the Index at around 5300, I had sold 5800 calls expiring on the 26th of September. I did not sell the corresponding puts immediately as the market had run up over the past two days and I thought I could get a better rate if I waited. Since then, the market has run up some 11% and is trading at 5900. Two days ago, at around 5750, I bought back the 5800 September calls and sold the same number of 6000 October calls (expiring 31st October). Since then the price of the October calls has almost doubled and I'm staring at a big hole.

Would appreciate any ideas on how to get myself out of this mess
:( :confused:
More...

I'd try closing the position.
 
Assuming the premise of the trade is now history (probably ancient history) you are no longer in the trading business you are in the hoping businesses . As a general rule the hoping business is a very bad business to b e in.

Close the position and then remain calm when, seconds later, it turns and goes on to become a winner. We have all be there. Simply resolve not to be there again.
 
Quote from volente_00:

atticus is that you ?
More...

I suspect more Maverick lol !

OP you can also wait to expiration if you have enough funds, this year has been quite ugly for call sellers, as you've noticed.
 
You must log in or register to reply here.
Back
Top