Options can be a boon in the right hands & a bane in the wrong hands
Options are known to a very powerful trading instrument owing to the high leverage that they offer. This high leverage can be very dangerous in the hands of novice traders because it exposes them to high risk. That is why Warren Buffet described options as “Weapons of Mass Destruction” though he himself uses them regularly.
However, expert traders with proper knowledge of risk management and position sizing are able to take advantage of the high leverage to extract super-normal profits from their trades.
Earlier, a corporate trader named ‘Team Anamika Algo’ had reported an earning of Rs 32 crore in 12 months on capital of Rs 30 crore. (See Algo trader has earned profit of Rs 32 crore in 12 months on capital of Rs 30 crore which is a return in excess of 100%).
A trader named Vijay Thakre has now reported verified profit of Rs 2,16,27,490.73 in the period from Apr 1, 2022 to Mar 31, 2023.
Finally so happy that @zerodhaonline has started verified PNL, Check the link below. More than the PNL best part is every trade was shared live in front of 300+ students https://t.co/QI8GM19HPF
— vijay thakre (@VijaySThakare) May 19, 2023
Total capital 1cr, deployed capital average 8L daily.
— vijay thakre (@VijaySThakare) May 19, 2023
He revealed that his total capital is Rs 1 crore and that the average daily deployed is Rs 8 Lakh.
Vijay Thakre explained in a YouTube interview with Vivek Bajaj that he is a “scalper” i.e. he takes advantage of momentum to rapidly buy and sell large quantities for small gains. He emphasized that scalping requires fast reflexes and one must be able to enter and exit trades without hesitation. Obviously scalping requires a different mindset as compared to normal trading.
A trader named Vikram reported an earning of Rs 3.36 crore in the period from May 19, 2022 to May 18, 2023 from buying and selling options. Mar 14, 2023 was the most profitable day with a profit of Rs. 1.03 crore. He stated that the RoI is about 100%.
Here is my p&l #VerifiedByZerodha #VerifiedBySensibull #StockMarket #trading #OptionsTrading https://t.co/kJnmthzWii
— vikram?? (@vikraag) May 19, 2023
Noted trader Bandi Shreyas reported an income of Rs 1.97 crore from F&O trades. He has not revealed what the RoI is though it may be close to 100%.
checking out @zerodha's verified P&L, good initiative
2 feedbacks –
1) cant select more than 365 days, should allow for the entire history of the account
2) Equity should show both realized + unrealized gains instead of just realizedhttps://t.co/sbBkhQNoPQ
— Bandi Shreyas (@BandiShreyas) May 19, 2023
Bandi Shreyas has also explained his trading strategy in a YouTube interview with Vivek Bajaj. Essentially, he sells Call and Put options which are OTM with the expectation that they will expire worthless.
Even expert traders can suffer big losses
It should be remembered that options trading is fraught with big risk and even expert traders can be caught unawares. A pro trader named Ashesh Mehta suffered a loss of Rs 4.4 crore in a single trading session which was 38% of his capital. This was caused due to poor risk management and the omission to place stop loss. Other traders also disclosed big losses on that fateful day. (See A trader lost Rs 4.4 Crore (38% of capital) today due to the unexpected plunge in the Nifty).
4.40 Cr Loss.
Booked 2 cr loss in the morning. Covered almost all loss in 44700 PE buy. The last hour insane selling took away almost 4Cr in a jiffy…Poor risk management cost heavily today.
Check out my P&L – #VerifiedBySensibull https://t.co/9l7iN07MNC— Ashesh Mehta (@bulkindextrader) December 15, 2022
So, one should be very careful and circumspect while trading options and never get carried away.
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