Terrific Two!!!

This week we completed TWO years of CTUG (Common Thoughts Uncommon Gains). Communicating with all the readers of CTUG has been nothing short of “terrific”. The team caught up for a small lunch treat. A large part of the discussion was around how CTTUG has evolved over last two years. Everybody had some or the memories around it.

While I sat there listening to everybody, my mind kept recalling about various forms in which CTUG had evolved. From small write-ups to blog format to full fledge ideation writing. Lot of feedback from the readers has helped us make it what it is today and I am sure it will improve over the coming years.

Evolving is one of the biggest gifts which Mother Nature has given to all its creatures. To keep adjusting oneself to survive and grow is truly a very important trait of each one of us. Infact, as traders we need to learn this trait the most. The more we adjust and evolve our thoughts, models and strategies to the changing situation in the market the better it would be.

Just to give a perspective of that, last few months have been comparatively difficult for making money, especially in large caps. Mid cap and Small cap stocks have undoubtedly been large money spinners, but large caps have largely lagged. One way to play this is to be involved in mid cap and large cap names. However, there all names don’t have derivatives attached to it.

The other way is to play large caps but using options. One of the most efficient way to use options in such consolidating market is to use covered calls. So, for any stock that you like, go ahead and buy it and along with it you can sell a Call option around the target levels.

This is has multiple advantages, in case the stock reaches your target, you can close all the positions. The gain here can be slightly lower than expected in-case you cover the Short Call at a loss.
In a situation that the stock does not reach your target but still is in the money, the Short Call will generate additional returns. One can carry forward the position to the next series and continue to sell Calls against it. Finally, if the stock falls and hits your stop the loss will be lower than normal as the premium on Short Call will protect your losses.

Undoubtedly, as traders who do not use options they are missing a very large part of the market, rather they are not fully evolved as traders. From an option traders perspective it is very important to read the data well and apply strategies effectively.

All in all, 2018, to me seems to be a year of evolving oneself to the next level as traders. Hope to see you around in this journey.

Happy Trading.

Cheers!!!