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Pran Katariya Profile picture
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15 Jun, 4 tweets, 1 min read
My largest Portfolio investment is HDFC Life. For a year until March I was merrily making 20-25 a month selling Straddles even as it went from 550 to 740. Unfortunately it suffered a 10% DD to 660. Showing signs of life again. Hope to resume Straddle selling when it reaches 700
Ok. Decided to start early. Sold a July 700 Straddle for 50
Even Option Sellers can be directional. Why should the buyers have all the fun?😀
Difference is that the buyers can make a great deal of money if Price moves in their direction in a relatively short period of time or lose most of it if it doesn't while as a Seller, I will make some money if it stays within the 630-770 range- other things remaining the same

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Pran Katariya Profile picture
16 Jun
During a workshop organized by Dr Tharp which I attended, he split us up into 10 groups of 3 each and had us play his Marble Game which he uses to teach the importance of Position Sizing. Each participant had to put up $100 with the winning team taking the whole pot
The game had a positive Expectancy so logically every team should have made money. Yet after some 15 draws in the 20 draw game, all but 3 of the teams were eliminated as they lost all their money. Just before the 20th draw, 2 teams were neck and neck and one way behind
On the last draw, the 2 teams increased their position size in a desperate race to win but a 10x loser was drawn bankrupting both of them. The third team with a modest return won the game and pocketed the $3000
Read 5 tweets
Pran Katariya Profile picture
19 May
I disagree with the view that hedges are used by Indian Traders to protect themselves. Actually a majority of Traders here use hedges just to reduce the Margin in a Trade so that they can take more Trades. This motive actually increases their Risk.
So say you sell a BnF Straddle for 400 for which you utilize a Margin of Rs 1.5 lacs per lot. Say the Trader does 6 lots utilizing Rs 9 lacs. Now to cut down his Margin he buys the wings 400 points away for 100 resulting in the Margin coming down to Rs 1 lac per lot.
However, given the mentality of the typical Retail Trader, who wants to maximize his use of Margin, he now sells 9 lots instead of 6. So now he has reduced his POP by almost 30% because his Breakeven is down from 400 to 300.
Read 9 tweets
Pran Katariya Profile picture
8 Apr
Samir Arora'a talk on How To Build an Equity Portfolio is one of the most fascinating and profound things I have heard on the Markets. We are conditioned to believe that Money is made in Markets thru our ability to pick the very best performers in the Market.
He turns the proposition on it's head and shows that if we had a Portfolio of 30 Stocks and average Stock in Portfolio was only the 90th best in the Nifty-combination of say some being 50th best and others 150th best- then we would be up 56x times over 15 years vs 7x for Nifty!
This is a return which very few have seen. He then argues that it is impossible for anyone to pick the best performing stocks in any Market due to it's random nature. So Steve Jobs had only 20% of his holdings in Apple while 80% was in Disney,
Read 5 tweets
Pran Katariya Profile picture
7 Apr
Sachin Vaze was suspended only when the NIA was allowed to investigate. ATS suddenly started finding evidence against him. Today the new CP has come out with reports casting serious aspersions on the functioning of the whole Dept.
Can we really trust the Mumbai Police or the Maha Govt to get to the bottom of this sordid affair? It is so much beyond the 'federal structure' being threatened as the Maha Govt would have us believe. The very faith of citizens in law and order has been shaken to the core
I hope SC throws out the appeal with some stinging observations. I also hope that no 'Political deals' are made to hush up the issue. Many Politicians, who are undoubtedly involved, need to feel the full force of the law and face the consequences for this betrayal of democracy
Read 4 tweets
Pran Katariya Profile picture
6 Apr
The more I trade, the more convinced I get that the most improvements in performance come not from discovering some brilliant strategy or even in it's execution but from cutting down common mistakes- most of which are common too and well documented for most Traders
Despite being aware of it and working on it for ages, my biggest flaw remains letting the losses in a few of my Trades run too far. These mistakes are not many but they still end up dragging my Performance by a few percentage points.
Yet I find many Traders seem to wear some large losses as a 'badge of honor'. Something that must be tolerated in the quest for possible gains. Who knows- it may actually work for them. Personally I would like to get out with a small loss than hang on in the hope of a larger gain
Read 4 tweets
Pran Katariya Profile picture
3 Apr
We live in an extremely competitive society and everyone wants to benchmark themselves with the very best. However everyone cannot be a Mukesh Ambani, a Sachin Tendulkar, a Rakesh Jhunjhunwala or a Tom Basso. Fortunately we don't have to be to live a happy and prosperous life
I doubt Warren Buffett spends sleepless nights thinking that in the last 5 years he has made less than 20% while Jim Simons has exceeded 60. In Investing and Trading, even 'mediocrity' is actually quite good.
In a seminar Samir Arora pointed out that even if your Portfolio was made up of Stocks which were 150th best, you would handily outperform the Nifty by as much as 9% and generate a CAGR of over 25%.
Read 7 tweets

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