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Trading: Up 40% since Aug 30.

Deepak Shenoy3 min read
Quick Facts
What is "Trading: Up 40% since Aug 30." about?
What category is this article in?
Stocks
Who wrote this article?
Deepak Shenoy, Capitalmind's research team.
When was this article published?
Published 27 October 2007.
How long does this article take to read?
3 min read

Trading updates: I’m up nearly 40% since I started (versus Index gain of 27%). A lot of changes to the portfolio this week.

On cash stocks, I had sold Jai Corp at 1278 as it showed signs of weakness…I bought nearly all of it back today as it showed strength again. I also bought L&T (at 3335) and Reliance Capital (at 1745). Today I added HOV Services - a stock that is unbelievable but seems to have been overlooked by everyone - at 205. A result arbitrage trade in Voltas didn’t quite work out, so closed it at a small loss. Closed positions: IGate, as I decided it wasn’t quite showing the momentum I wanted. Bought at 338, sold at 355 within two weeks.

F&O: Expiry was on Thursday and I sold out the 5100 puts as the Index neared 5200 as there was very little time left to expiry and these options were expensive. I owned some 5700 calls which obviously didn’t make the grade, but they were high risk and low cost anyhow. A number of Nifty future trades, based on momentum based directional calls, yielded nearly 20% on the investment this week. I took a loss in the Suzlon future the day before its results and I was totally unaware that the next day was results day! Had I stuck on, I would have made over 60% on that investment in a day - lesson learnt: don’t exit a stock before you check its event calendar.

Small losses also in NIIT Tech (waited for results and then the market didn’t like ‘em), India Cements (another ridiculous intraday play - note to self: don’t play the intraday game, it doesn’t work for you) and in Nifty puts and calls on Expiry day (it was an attempt at a pinning strategy which didn’t quite work).

I managed a result move in Satyam - results being good, I picked up the future for a three day move. The very next day the stock ended up 5% higher, and I sold - the leveraged move yielding about 4,200 per contract. I sold as it retraced actually, a trailing stop loss in a way. Some quick momentum moves in RPL as well, over two days, have yielded an F&O profit. I own the stock in cash (as a longer term purchase) but the intraday moves in RPL scare me, as it could wipe out a significant amount of my capital. So I end up taking small profits. Lesson here is: Either increase your capital or don’t use these stocks on F&O, because I will not always be lucky.

What’s coming out of here is certain parameters I am comfortable with, and certain others I am not. There are lessons on multiple fronts: what kind of stop losses I should have, how I should deal with massive volatility, what kind of positions are within my comfort zone and finally, what data I need to make important trading decisions. My aim is to beat the index comprehensively - right now I’m up 40% and the index is up 28% in the same time frame, and I need to be much better. What’s interesting is that I did not overleverage myself, so I didn’t have too much of a problem during the dip, in fact I recovered all losses the day after the dip.

Note: This is my trading update. I don’t mean to recommend any of the above stocks, or even that you try anything like this. Don’t do it because I do it - as I’ve said I can afford to lose a significant amount of the money invested.