Had a discussion with another Trader on Trading large vs small accounts. I felt that generating a smaller Return on a large amount was much more difficult than generating a larger Return on a smaller account whereas he felt that the Account size didn't matter.
I just recalled a conversation with Seth during one of our Mentoring sessions way back when he came up with a perfect analogy for this. Put a 4ft wide board between 2 tables in your living Room and try walking across it-easy right?
Now do it at the 2 storey level between 2 buildings. Not so easy anymore. And then do it between 2 skyscrapers. That's the difference between taking 5 lot positions in a small account and a 500 lot one in a larger one. Same logic, same Risk Management but...

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Pran Katariya

Pran Katariya Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @KatariyaPran

Oct 4, 2021
Why am I buying Stock and selling Straddles against them instead of selling 2xPE? There are many reasons that I have tried to explain in some of my previous threads but what it boils down to is the difference in thinking of these two Trades
So while selling 2xPE is an opportunistic Trade for that month, my thinking with the Straddle is to invest my funds into building a portfolio of strong stocks and generate a monthly Return from them while they continue to appreciate.
I like to look at this as a long term Trade over many months where I will keep rolling the Straddle to future months for as long as the Stock remains strong. How do I gauge the suitability of the stock? In a word Relative Strength
Read 7 tweets
Oct 3, 2021
UBL is an interesting stock. The penalty of Rs 750cr has acted as a bit of a dampener on the Stock price and may continue to act as a drag in the near future. But given the near monopoly it holds in the Indian Market, the long term prospects are good.
The Stock is around 1575 and the Premiums are extremely good at around 140-160 for Straddles which I think more than adequately covers the expected range within which the price should move. I think it's a good bet at this price and this is how I plan to Trade it
Buy 1 lot and sell a 1560 Straddle for around 150. Don't mind booking profits at around 1750.Also sell a 1600 Straddle for the same price. Don't expect price to go upto 1750 and willing to add more around 1500. Hopefully price will stay in this range and result in some profits.
Read 6 tweets
Oct 2, 2021
Have invested in many companies which are a play on the growth in the real estate industry. Astral, APL Apollo, Polycab, KEI, Asian and Berger Paints etc. One area I seem to have missed out on is Home Finance.
Canfin Homes is looking like a good candidate at around 670. Strong stock with sound balance sheet to exploit growth opportunities. Even better it enjoys excellent premiums in Options. Plan to jump in with small qty and sell an ATM Straddle at around 85-90.
Bought Stock at 678 and sold a 680 Straddle for 90
Read 8 tweets
Sep 6, 2021
Tried something new today. I feel IEX has run up too much and too fast. So did a CE Ratio (bought 1x620CE and sold 2x640CE) for a credit of 6312. No downside Risk and upper BE of 665. Hope to take off the 620CE at some stage which should result in a healthy Profit. Image
RoC of 4% if Price remains below 620-at which stage I will adjust and a POP of 90%.
Sold a 520PE for 9
Read 6 tweets
Aug 2, 2021
Many use Cash Covered PE to try and buy stocks at prices below spot or generate income if those prices are not hit. So, if you like Tata Consumer at around 740- it currently at 760- you could sell the ATM 760PE for 22. If target price is not made you can get to keep the entire 22
Personally I prefer doing this with an OTM Straddle. So I will sell a 780 or 790 Straddle for 50. That way, I have the possibility of making much more if Price remains above 760. It opens out some upside Risk but a Straddle is easy to defend when Risk is on only one direction
Results are particularly good when this is done with a slightly bullish stock. I sold a 2000 Straddle in Deepak Nitrite for around 205 when spot was 1900 with a willingness to take delivery around 1800. Although the Stock is up 6%, the Straddle is in an MTM profit of 45per lot
Read 6 tweets
Jul 21, 2021
The Straddle is my favorite trade these days. But more often than not, one needs to adjust to make a good return from it. There are many ways to do this depending on your view, psychology and imagination. Will discuss a few that I use
The Straddle is a delta neutral strategy and it is important to keep deltas in check during the course of the Trade and not let them run away from you. Of course Volatility is the elephant in the room- but not going there as that will require a separate discussion
The first and most common method is to go 'inverted.' That is to say to shift the untested side to generate additional Premium and increase the runway to Breakeven. So if you start with a Straddle at 700 and price goes to 740, you can move the PE up to say 720.
Read 16 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

:(