Looking for comments on my first trade šŸ‘¶

General
1

Hello everyone :wave:

Iā€™m a passive MF investor, I placed my first real trade today to generate some cash flow to meet my monthly expenses. I would like your comments on my process, if there are any improvements or things you wouldā€™ve done differently it would be appreciated :dizzy:

Live position on Sensibull:
https://web.sensibull.com/verified-pnl/mature-flower/live-positions

Description:
Jade lizard into HDFC Bank Dec option series. Stock goes down to short put (cash secured), buy stock worth 10L and do covered calls for more income in subsequent months until itā€™s called away. Stock stays above short put strike, collect all premium and repeat the same next month. This is the wheel strategy but instead of normal short put, I used jade lizard to enter the trade (more profits if HDFC trades in a range for next month).

Analysis done (quite basic :joy_cat:):

  1. TA: Stock is generally in an uptrend, currently trading above 50 DEMA even with recent selloff. Positive 1 yr and 5 yr returns.
  2. FA: Google Finance shows increasing revenue and profits for last few years.
  3. SA: Google Finance shows no recent negative news.
  4. QA: 30 delta short put for favorable entry price and avoid unnecessary assignment. Short call strike above strike with highest OI hopefully acting as resistance.
2

Doesnā€™t look like a beginner trade to me.

With HDFCB testing 1800 3 times, I guess thereā€™s a decent chance that we may get third time lucky. If it stays in the range, its even more better. Kudos :ok_hand: :ok_hand:

1 Like
3

Sensibull making me look better than I am :smile_cat:. But Iā€™ve been virtual trading and reading up on the subject for a few months now!

Thanks, I didnā€™t notice that at all from the charts but I see it now :face_with_monocle:. Got lucky by looking at the OI.

4

If you considered the whole market condition till recent , Reverse Jade Lizard would have been a more profitable trade, but you are lucky HDFC Bank moved Higher :slightly_smiling_face:

5

Yes, reverse jade mightā€™ve been a more profitable trade but I donā€™t feel comfortable shorting naked calls. Once I get assigned on those short puts, I would definitely consider it though! :slightly_smiling_face:

6

In my experience ā€œStocksā€ dives down more then they go up, especially stocks which are in FNO :slightly_smiling_face:

7

Itā€™s all perspectives and baises. Depends on who is looking.

8

Cash-secured puts are an excellent strategyā€”Iā€™ve been using them for a few months now, and they work well if managed carefully. Itā€™s crucial to be cautious with leverage and only use it to the extent youā€™re comfortable, ensuring even if a stock gets assigned, it doesnā€™t exceed 10% of your overall portfolio. Diversifying across sectors helps mitigate risks, and pledging debt funds can provide an additional return boost. Always sell puts at strike prices where youā€™d be comfortable owning the stock, as stocks can stay below your purchase price for years. Remember, option sellers often ā€˜eat like birds but can **** like elephants,ā€™ so discipline and risk management are essential. Best of luck with your HDFC tradeā€”it looks promising!

P.S: I try to get expected premium from Black scholes model just to get an idea.

2 Likes