HDFCBANK

Spot 800 

Sold HDFCBANK JUL 800 PE @16.8

Break even 783.20

Will take delivery if ITM.

TCS

I have bought TCS Aug Fut for 2014 and sold Aug 2000 CE for 104
Best case I may get 20,250
Worst case I will take 225 qty delivery of TCS @2014
Break even is 1910

I am doing an income trade. If TCS falls, I will accept delivery at effective cost around ₹1,910. After delivery, I will sell calls at or above my effective cost until the shares get called away.

1July EOD:

2nd July:

Made a profit of 1,226

Option strategies for rookies

Cash-Secured put

The setup:

Sell a put, strike price A

Keep enough cash on hand to buy the stock if the put is assigned

Generally, the stock price will be above strike A

***

Covered Call

You own the stock

Sell a call, strike price A

Generally, the stock price will be below strike A

***

Protective Put

You own the stock

Buy a put, strike price A

Generally, the stock price will be above strike A

***

Collar

You own the stock

Buy a put, strike price A

Sell a call, strike price B

Generally, the stock price will be between strike A and strike B

Option selling process

1. I will trade NIFTY200 QUALITY 30 and NIFTY100 QUALITY 30 stocks.

2. I will identify fair value using investing.com

3. I will sell OTM cash-secured puts if the strike is less than 20% of fair value (at .8*fair value as I am looking for a 25% upside) or if I notice any strikes below the 20% of fair value I will pick the far strike to sell.

4. I will pledge gilt, money market and liquid funds to get the margin.

5. If the option is in the money at expiry, I will buy the put option and will unpledge the funds and buy the stock from the market.

6. If the stock is in the portfolio, I will again sell the covered call at a strike equal to Fair value*(4/3). If I do not find a strike I will sit tight.

7. If the option is in the money at expiry, I will buy the call option (I have to check if I have enough cash to purchase the option)

8. I will never sell a covered call for less than the buy price if the stock price drops.

9. I will only do cash-secured puts and covered calls. Basically a wheel strategy.

My investment process

Buy process: 

1. I use a screener to filter for stocks to buy when the fair value in investing.com has an upside of 25% or above and the overall health score should be greater than 3 in investing.com. I update the watchlist daily.

R1:

Profit growth 5Years >=15 AND

OPM 5Year >=2 AND

The average return on equity 5 years >=15 AND

Market Capitalization >400 AND

Debt to equity <=.3 AND

Price to Earning >=1 AND

Price to Earning <=30 AND

Interest Coverage Ratio >4

R2:

Debt to equity <= .3 AND

Market Capitalization >=400 AND

Price to Earning <=30 AND 

Price to Earning >=0 AND

The average return on equity 5 years >=20 AND

Interest Coverage Ratio >= 4 AND

Profit growth 5Years >=10

R3:

Debt to equity <= .3 AND

Market Capitalization >= 400 AND

Price to Earning <=30 AND

The average return on equity 5 years >=15 AND

Dividend yield >=1 AND

Price to book value <= 5 AND

OPM >=1 AND

Interest Coverage Ratio >= 4 AND

The average return on capital employed 5 years> 10 AND

Profit growth 5Years >=10

2. I buy stocks in the below mutual funds when PE is less than 20 and the fair value in investing.com has an upside of 25% or above. I update the watchlist once a month using moneycontrol.com or morningstar.com.

Parag Parikh ELSS Tax Saver Fund

HDFC small cap fund

Kotak Flexi

Kotak Emerging Equity

Kotak Small

Kotak ELSS Tax Saver

Franklin India ELSS Tax Saver

DSP small cap

Update(14 Aug 24): I am buying stocks where mutual funds (Multi, Flexi, Large, Mid, Small, Dividend, ELSS, Value, Focused except arbitrage) are buying irrespective of PE, and the fair value upside is 25%.

3. I buy stocks in the below indices when PE is less than 20 and the fair value in investing.com has an upside of 25% or above. I update the watchlist once a month using moneycontrol.com or morningstar.com.

Nifty Smallcap 250 Quality 50

NIFTY100 QUALITY 30

NIFTY200 QUALITY 30

NIFTY MIDCAP150 QUALITY 50

Update (14 Aug 24): Irrespective of PE I am buying.

4. I use Recession-Resistant and Simple Screener in investing.com to buy stocks when the fair value in investing.com has an upside of 25% or above. I check the screener daily.

5. I also use HDY and ABC screener to buy stocks when the fair value in investing.com has an upside of 25% or above. I update the watchlist daily.

I buy one script daily with the highest upside and 0.5% of cash + invested amount.

I update the value research, Google Sheets, and watchlist when I buy stock.

Sell rule:

I will sell the stock as it is overvalued on investing.com. I check daily for overvalued stocks.

I update the value research, Google Sheets, and my own watchlist when I sell stock.

IPO

Open IPO:

02/14/2024: Buy JSFB 36@414

Closed IPO:

02/14/2024: Buy CAPITALSFB 32@468

03/04/2024: Sold CAPITALSFB 32@374.4

Gain/Loss:  -2995.2

XIRR: -98.62%