The financial year 2020 has ended for us on a good note. Our net returns (post all taxes and brokerage) stood at an impressive 23.5% p.a. In the first half of the year, we suffered few major setbacks owing to over-leveraged positions in futures. We managed to come back strong with delta-neutral trades and made the most of the volatile markets by winning with gamma and vega. Our strategy of conservatism in trading has benefitted us yet again. We avoid taking too much of risk in our trades and strictly believe that:
'Rome was not built in a day, but Hiroshima and Nagasaki were destroyed in a day'.
We maintained our track record of scoring well in volatile months. September (the bull run after corporate tax rate cuts) and March (coronavirus scare) were the better months for us owing to our trading methodology. In both these months, we got the benefit of unlimited profit and limited loss methodology. Seldom do we take trades where the loss potential is unlimited, and profit potential is limited. Yes, we are not very big fans of options shorting! One can make money with option longs and spreads by understanding options greeks well.
On Greeks front, Gamma and Vega remain our strong areas. We have successfully managed to keep our delta obsession limited (delta obsession is the desire to make money by predicting price too much). We rarely take trades to benefit from Theta decay (time value) where the downside is unlimited. Yes, we are not big fans of option shorting (except expiry day intraday trades)
Very soon we will update you with the results for our weekly expiry trading strategy (benefitting from gamma and randomness). Happy trading!