When is the best time to start trading with option hedging strategies?

Hello Guys. I hope you are doing well. Over the last many months, I received many queries. So today I thought that I should write the blog to answer those queries. One of the most asked questions is: “When is the best time to start trading with option hedging strategies?”

So I’m writing this blog post to share my thoughts on this topic. I hope it will help you to take a better decision. In case if you still have any queries, feel free to type them in the comment box. I love to solve all your queries.

Before we move to our main content, I have a special announcement for you. We have redesigned our Mentorship program in such a way that you will get more practical help in the implementation during the live market. So we have introduced live market sessions also in this mentorship program where we will meet in the live market at 10:00 am on every trading day (except Wednesday). We also offer 33% off for early bird registrations. So book your seat now!

When is the best time to start trading with option hedging strategies?

My simple answer is NOW! Now is the best time to start trading with option hedging strategies. Reason is:

If you have observed you will see that fluctuation in the market has increased a quite in the last few months. One day we saw Upside movement. The second day it came down. And the interesting thing is: after this fluctuation stock/indices expired in a range only. It expires where it started.

If you are a passive trader then it’s difficult to manage your positions when it looks like the trend is changing every single day.

One of the main reasons which I found is that more and more people entering the market every day. Every trader placed a few orders that bring some liquidity to the market.

More people means more liquidity. And it will keep increasing in future also.

So how one can make money in this type of highly fluctuated market?

The answer is simple: Avoid day-to-day fluctuation.

But do you think is it that simple?

Let’s imagine, you have a short position in SBIN and today you say that SBIN is going UP at a very high pace. Can you sit relaxed while looking at MTM where loss is going up?

If you want to keep yourself relaxed then you have to limit your risk first. If you are mentally prepared for the maximum loss you will get from any particular strategy or position then chances are high that you will end you with better trade management.

Let me show you one of the strategies I have placed last month:

The stock was ICICIBANK and when I created this strategy it was trading at around 905. My breakeven was 565 – 935 which seems quite perfect at the time of entry.

After I initiated the strategy, we saw good downside movement from 905 and made a low of 854.55 on January 11, 2023. In just 10 days it hit my breakeven and stood with a loss of ₹14000. So what should I do here?

Ideally, Either I should book Ioss or should adjust my position but I did nothing! Why?

As I have shared above If you already knew how much the max loss you can get from any position then chances are high that your trade management will more accurate. I knew that the max loss is ₹24000 and I was mentally prepared for that. So I analyze data and found that ICICIBANK has good support around 560 and more people are creating short positions on the PUT side near 560. So I did nothing and hold the position and result: you can see yourself. Position closed with a profit of ₹22000.

So this is how option hedging strategies can help to make money in a highly-fluctuated market Because you can limit your risk which can improve your trade management.

This is the practical learning you will get from my mentorship program. Because we discuss these trades and adjustments in the live market with our students.

I hope now you have understood why this is the best time to start trading with option hedging strategies. If you are a passive trader and wanted to generate your monthly cheque from option hedging strategies while keeping risk on the limited side to protect your capital, then start learning and implementing these option hedging strategies.

In case if you have any queries, feel free to type in the comment box.

Thank you for taking out the time and read this article. Your feedbacks are highly valuable please share it in the comment box.

Have a profitable trading!