Caution on Thursday, care-free on Friday
Traders on Dalal Street were very cautious on Thursday, 1st February, because they were apprehensive of the wild moves expected during the pronouncement of the Budget. However, the market stayed placid and range-bound and the day ended uneventful. Option traders took home large chunks of gain.
They expected the markets to stay placid on Friday as well and were carefree. Their attitude is exemplified by that of a young, popular and dynamic trader named Ayush Verma. He sold 1000 lots of naked Put Options of Sensex 72500 PE and went to the Gym for a workout.
When he returned after an hour, he saw that the Put options had surged in value from Rs 50 to Rs 1000. The broker squared off the positions as the margin requirements were breached. There was a colossal loss of Rs 83.88 lakh.
“All Financial year profit gone in 1 move,” Ayush Verma bravely reported, with a straight face.
This fiasco happened because the Sensex opened Gap-up at 72000, surged to a high of 73000 by 11.40 am and plunged immediately thereafter to close at 72000 by EOD.
Jegathesan Durairaj, also a popular trader and trainer, reported a loss of Rs 28.5 lakh. He blamed “Price freeze, Slippage & freak trade on SL hunt” for the loss.
“BFO trading should be stopped… Their infra is not ready to handle the large transactions.. The BSE Derivatives chain site freezes many times.. Brokers unable to cope with BSE option trading @SEBI #SEBI Should take initiative and stop trading on BFO till BSE fixes them,” a trader commented.
Other shell-shocked traders also wearily reported losses. Some were emotionally scarred and said they would take a break from trading.
Avoid trading Sensex and Midcap options. They are not mature instruments
Expert trader Mitesh Patel, who reported a gain of 200%+ from Futures trading in this FY, counselled traders to avoid trading the Sensex and Midcap options and to stick to the tried and tested Nifty and Bank Nifty.
He also advised that traders should avoid trading every instrument’s expiry. “If u will play expiry everyday then there are high chances of blowing capital,” he warned in a grim tone.
One man’s loss is another man’s gain
Thankfully, it was not all gloom and doom on Dalal Street. Some traders reported earning handsome profits as recorded by the Indian Traders League.
Trader Vicky Kumar explained the modus operandi by which he expertly converted a MTM loss of Rs 72 lakh into a gain of Rs 16 lakh.
