Keshav | Equity & Options

Hi Everyone! I'm Keshav. Derivatives Analyst at a trading firm. What I do : I'm on a desk trading US options for clients. Building the strategies, picking strikes and expiries, sizing positions and deciding when to cut or roll. Every trade goes on a running P&L so we know which setups actually pay and which don't. Outside the US book, I'm on Nifty and stock options looking for setups worth trading alongside my usual swing trading which I have been doing for years. How I got here : Commerce grad. Started as a Junior Finance Associate, doing options trading and equity research for over a year. Top performer in a simulated trading program with 35%+ returns in 4 months on BSE500 stocks. Moved from a data analyst role into derivatives after that. Cleared NISM VIII (92.5), XV and XVI along the way. Where I want to go : build my own systematic options strategies. And help retail traders here trade derivatives with proper risk management instead of gambling on expiry or at least get profitable with swing trading. What you'll find here : Nifty, Sensex and stock levels I'm watching, and the setups I like Options explained in plain words. Expiry, option selling, expected moves, dealer flows Risk and discipline. Stop losses, averaging down, journaling, the rules I follow after a bad day How the US markets, Fed, crude, gold and Bitcoin feed into Indian markets IPO calls, including the ones I'm avoiding If that's your kind of feed, follow along. Let's see where this goes.

Warren Buffett once called derivatives "financial weapons of mass destruction". A few years later, he sold billions of dollars of put options. Between 2004 and 2008, Berkshire Hathaway sold long-dated put options on major stock indexes, including the S&P 500. It collected roughly $4.9 billion in premium. Sounds like a contradiction. It wasn't, once you look at how he structured it. The puts were European, so they could only be exercised at expiry, which was 15 to 20 years away. Berkshire mostly didn't have to post collateral. And he got to invest the premium for all those years in the meantime. In 2008, when markets crashed, the mark-to-market loss on these puts ran into billions on paper. Many people said Buffett had got it wrong. He didn't close them. He explained that what mattered was where the indexes would be at expiry, not where they were in 2008. Over time, many of the contracts were closed or expired with Berkshire keeping a large part of the premium. The lesson isn't "sell puts like Buffett". It's that the same instrument can be reckless or sensible. It depends on the terms, the time frame, and whether you can survive the bad years in between.

In 1983, two traders made a bet: can trading be taught, or are good traders born? Richard Dennis was a famous commodities trader in Chicago. He had started with a few thousand dollars and reportedly turned it into around $200 million. His partner William Eckhardt thought trading was a talent you either have or don't. Dennis thought he could teach it to almost anyone. So they put ads in newspapers. Thousands applied. They picked a small group, which included people with no trading background at all. Dennis called them his "Turtles". He taught them a simple trend-following system for two weeks. Exact rules for entry, exit, position size and stop loss. Then he gave them real money to trade. Over the next few years, the group reportedly made well over $100 million. The interesting part: the rules were not secret or complicated. Some Turtles still did badly. The ones who did well were the ones who followed the rules, especially during long losing streaks. So who won the bet? Trading can be taught. Discipline is the part that's hard to teach.

On 19 October 1987, the Dow fell 22.6% in one day. It is still the biggest one-day percentage fall in its history. A big part of the blame went to something called portfolio insurance. Large funds had programs that sold index futures automatically as the market fell. The more it fell, the more they sold. Everyone's "insurance" kicked in at the same time. Here's the part options traders should know. Before 1987, US index options were priced with roughly the same implied volatility across strikes. OTM puts and OTM calls at the same distance cost about the same. After 1987, that changed for good. OTM puts started trading at higher IV than OTM calls. Traders had learned that markets fall much faster than they rise, and they started paying for that. That shape is called volatility skew. You can see it today on SPX and on Nifty. Look at the IV of a 5% OTM put versus a 5% OTM call. The put is almost always higher. So when you sell OTM puts and the premium looks juicy, it's not free money. Part of it is the market still remembering 1987.

This is how degenerate America got!!

WTF IS GOING ON IN THE US?

Covered calls aren't free money. You're trading away your upside for a fixed check. Feels great in a flat market, painful in a rally.

Hehe, this is how an Indian team should be on the ground against these pigs 🔥🔥 nitter.gq/kohlisbat/status/21215…

Isn't it obvious considering the amount of credit US citizens function with?

Why is no one talking about Air Pollution? It's being ignored like a common cold by the ones responsible to fix this.

Saturday night and I'm still reading about the 1987 crash. If you trade options, it's worth knowing why OTM puts have been more expensive than OTM calls ever since that one day. Writing it up for tomorrow.