Option Buyers AND Sellers - WE ARE ALL TRAPPED!

hi this is PR Sund welcome to the special episode where I'm going to tell you something very very interesting so in the sea there are some small fishes there are some medium siiz fishes there are some big fishes what happens the mediumsized fishes eat the small fishes and the big siiz fishes eat the medium siiz fishes so that is the life in Sea now same thing is happening in the stock market so this story is All About explanation of that story number one here small fishes are the people who are option buyers so people with some small Capital you know so they expect the market to fall they go and buy a put option Market go up you know they expect they buy some call option and the medium siiz fishes are the option writers so they sell the options to these small fishes they eat their money and this is what has been going on for a long time and that is why 95% of the people they don't make money in stock market about 89% of the people they lose money in stock market and most of the people who lose are the people who are option buyers option sellers you know once in a while they are lose you know because you know like you know like many times option buyers will lose but sometime they win but many times option sellers they win but sometimes they lose when the markets move very very violently but overall it is the option buyers who lose the money because they are small fishes option sellers who are the medium siiz fishes they eat them now for the last few months the things are changing totally the last few months the markets are making very very sudden move I think one Monday I think about one or two weeks before on one Monday the midcap Nifty fell 2% in just in a matter of 1 minute and those who traded in midcap Nifty options they lost heavily I think just two days before Nifty fell 200 Point within 1 minute and I was just watching the trading terminal although I don't trade but I used to watch you know 2 rupe option has gone to 120 rupees all in a matter of 1 minute a 15 rupees option gone to 300 rupees in a matter of 1 minute and at the same time 15 rupees call went to 20 rupees so this what these people call you know they call it as injection you know a sudden Spike and you know uh many many option wrers they have been demoralized for the last few months and some people even left the profession left the trading totally because you know the loss was UN aable I heard that uh on last Thursday this Nifty injection I think many many even Pro accounts proprietary trading accounts also they have lost even 30% 40% 50% and people put Stop Plus but the Stop Plus jumps right so why all these things happening only for the last few months why it was not happening all throughout the year all right so there was no answer but suddenly today I saw some news there is one H fund uh in US called Jan Street and there is another H fund called millium hedge fund so this Millennium hedge fund uh if I'm not wrong that is the fifth largest hedge fund in the world and Jan Street may be a smaller hedge fund so what happened so Jan Street has filed a case in a US court against Millennium H fund and two of the employees of the Millennium hch fund so what this Jane Street people are saying those two people were actually employees of J Jane Street and they left the company and they have the Jane Street has spent millions of dollars to develop some algo to trade in Indian stock market and using that strategy they have made1 billion US in 2023 that means in one year they made about 8,000 CR profit so that's almost every day 33 CR that's a very very huge amount of money and what this gen people telling the court so we developed a strategy by spending millions of dollars and we were making $1 billion last year and now in the last one month you know the profit has come down by 50% and they were saying that these two employees who are working in Jan Street they left the company they join millium hedge fund and there these two people tell the same strategy there now Millenium hit fund is executing this strategy so because of that our profitability has gone down by 50% so please give punishment to uh those two employees and the Millennium hmen so this is the case in US court now actually the Jane Street lawyers they mention this uh you know by mistake so the by mistake they told which country is that the country is Indian stock market so just imagine what can be a strategy where you can make1 billion us in one year you know that to you know using a computer no you are not taking the market view right okay it's a computer doing everything so probably I'm just I'm not saying this has happened but probably what could have happened so that is my like my rational thinking my logical thinking so what these people do you know these people are watching okay medium siiz fishes eat the small fishes how by selling options right so by selling options you know I will tell you two dominantly played option one people with one CR 2 CR 5 CR 10 CR you know that they do intraday short straddle they sell call option and put option at the same strike price at the money they put a stop stop L on both the sides Market go sideways they make some profit Market Trend in One Direction no problem one side stop loss hit the other side they get the profit okay and the problem will come only when the market uh chop around Falls then shoots up like that so this is one set of people another set of people you know people who have a large Capital you know they used to sell you know far out of the many option for 2 rupees one rupe you know so far out of the money call their sell for 2 rupees far out of the money put they sell 2 rupees they collect 4 rupees 4 rupees into 50 is become 200 rupees the capital required for this about 1 lakh rupees for 1 L rupees if you're getting 200 rupees you know for one day you know if you do this for four trading sessions that means every Thursday in Nifty so you get about uh 800 rupees the trans transes into about 0.8% return per month that translates into about 10% perom so these people are getting 6 7% in FD plus again 9 10% in uh trading so they get about 16 17% return they're very happy because if somebody having 100 CR Capital even 16 17% will translate into 16 17 CR so this is what people do right now in fact I'll tell you uh a real story uh that was the time you know my broker has introduced basket order so I was trying some basket order that's the number one number two those days you know the Brokers were allowed to give leverage if I have one CR the broker will give 10 CR limit for me to do the trading so what I used to do those days if I have one CR the broker give 10 CR let me give a simple example if I have 1 lakh broker give 10 lakh so what I do I sell option for 2 rupees on the downside and 2 rupees on the upside I get 4 rupees 4 into 50 is 200 rupees okay that's for one lot but if I have 1 lakh rupees broker give give 10 lakh Rupees as the limit so 10 * 200 Rupees is 2,000 Rupees but my capital is only 1 lakh so for 1 lakh if I'm getting 2,000 that's a 2% return that's per week and then if I trade for four four times in a month I get you know 8% return once in a while you know you stop loss hit you know so even you lose 3 4% you still gain 3 4% so this is a very very famous trading strategy we used to do those days what happened one day my broker has given 10 times the limit right I was supposed to place an order I was supposed to sell that day Market was bullish Market was trading actually higher and I wanted to sell far out of the M put option for 2 rupees so when I was doing the basket order okay I don't know what happened so when I choose the options okay later you know automatically they change to Futures so I was supposed to sell far out of the money put option 15,000 quantity I think if I'm not wrong uh that time the bank Nifty lot size may be around 50 okay this has happened many years before I don't remember exactly so let us say the lot size is 50 the 15,000 quantity is almost 300 Lots right 300 Lots is not a very big one is a or maybe let us say 500 Lots maybe 500 600 Lots is not a big one market has open in green and Bank Nifty is trading at a higher level that's why I wanted to sell far out of the money put option 15,000 quantity I made an error trade instead of selling far out of the money put option by mistake you know it was a future 15,000 quantity future I click at the market order so suddenly this 500 600 Lots Market order it went okay bil me the bank Nifty crashed by 150 points 150 point now now may not be big because now it is trading around 45,000 48,000 but those days I think it was trading around 10,000 or 15,000 you know 10,000 15,000 you know falling 150 Rupees is almost 1% right so immediately I realize the mistake I squared it off I book the loss but why I'm telling you just 500 600 losss you go and put the market price even in a bullish Market you know the bank Nifty comes down by about 1% so now my point here is that okay option buyers are small fishes option sellers are medium fishes they're eating the small fishes and now these big fishes are watching the medium fishes and what these people are doing on one side there's a huge number of players there you know doing a short SLE with a stoploss another side huge number of people s sing 2 rupee put option and 2 rupee call options and they you know using a computer algorithm you know they calculate you know what is the total average you know the number of lots they are being traded how much is in the open position you know and then you know if you go and put one order Market order very big quantity and how much you know Market can crash within how many seconds all these they are calculating and then what they are doing say for example one day the let us say the market is very very bullish when the market is very very bullish what the people do far out of the money put option people will sell for 2 rupees right the intraday short stle people okay uh you know so their you know their call may be slightly in trouble but put with they'll be sitting in a good profit so what these big fishes will do slowly they go buy put options and then slowly they go and sell call options and in huge quantities so you know anybody do you know it will be reflecting in the open interest so you will see more and more put buyers okay but these medium fishes they will not think that the big fishes are doing this they will think the small fishes are buying the option it's good then slowly there addition of selling of call options what this medium Fishers will think no no there's a huge open interest addition in call option people are selling right so that means another medium fish is doing that that's what they will think so they will never know that the big fish is doing so what this big fish do after executing all the trades after buying a huge amount of put options after selling huge amount of call options what they will do I'm just giving an example let us say it's a Wednesday is a b Nifty expiry right HDFC Bank PCH Bank icsi bank State Bank if these four Banks put together it has about 80% weightage in Bank Nifty so what these people may do let us say they put 100 CR each 100 CR HDFC Bank 100 CR icsi Bank 100 CR quak Bank 100 CR State Bank they put a sell order at the market price for 400 CR at one point of time what will happen definitely Bank Nifty will crash 500 600 point so what happens you know so the put option they uh bought will give huge profit all option they sold will also give huge profit then these are like computer design once they put the market order you know sell order and then 500 point they will place a buy order also so the fastness it comes so the bank Nifty will be bought at 500 Point lower after that even if Market recovers you know so the profit in the future will compensate the te so somehow you know they will make profit in put option buy also call option sell also and you know uh future uh cash Market shot also so number one for a long time we had only Nifty expiry only once in a week okay then Bank Nifty expiry was also on Thursday only so either you can do Nifty or Bank Nifty but we had only one expiry per week then what happened now because you know exchange want to make more money you know they introduced everyday option expiry Monday mid cup Nifty expiry Tuesday fin Nifty expiry Wednesday Bank Nifty expiry Thursday Nifty expiry and Friday you know uh sensex option so what happened you know the medium fishes you know they are so much eager to eat more small fishes so instead of doing in other instruments so everybody started trading uh daily expiry Monday they do uh midcap Nifty uh straddle Tuesday they do fin Nifty straddle and every day so because every day this is happening so the big fishes you know they get more chance and now another problem is that you know assume that big fishes do this every day no every day if they do you know then you will know that every day Market moves like this you know at some point of time this medium fishes will get out of the market so that's why these big fishes don't do this every time so they do once in a while so they take a huge amount of money but now what has happened you know probably this gen Street was doing this I'm not saying that they have done okay but probably they could have done this so now two of their employees have gone into Millennium now Millennium is also doing the same thing so this gen seat is going to the court now you see instead of one H fund two H funds are doing this right and then you know more and more people come and do so then you know it become more and more frequent so in fact almost every one week at least once in a week you know this kind of injections are happening in our stock market Nifty move 200 Point Bank Nifty move 500 point you know midcap Nifty move 2% and all this happening in one minute okay see a sensible person who want to sell huge amount of shares will never put a single order at one second because you know that when you put a single order in one second you know Market likely to crash okay you are not going to get a good price if a genuine investor if you want to sell fin CR right so he may sell 10 CR now 10 minutes later he will sell another 10 CR 10 minutes and later he will sell another CR so that you know without disturbing the market okay he will be able to sell huge amount of shares you know at a price market price without crashing the because price crashes you know like you share also you are not going to sell at the same price prices will fall you know you will have to sell at a lower price so genuine investors will never sell huge amount of shares at one go but what is happening for the last few months you know huge selling happening in 1 second and 2 second I remember in the last one month you know okay two incidences where midcap Nifty fell 2% in one within few minutes and then last Thursday Nifty fell 200 Point within 1 minute so this is happening this is clearly uh you know operators game so people say trading is a zero sum game but actually that's not a zero sum game know if you consider The Brokerage stt St Duty everything into consideration but on top of it you know if one US based hedge fund can make1 billion you know then if there are 10 15 uh hedge funds come into the our market and if they're making 105 billion dollars so what is it you and me going to get so seriously I advise you you know uh I would say buycott the intraday trading right so we have to force the exchanges to stop this nonsense of everyday expiring so if the Traders stop trading they don't do the intraday trading so this H funds also cannot play with you right and then you know when there is no popularity you know like you know in us uh the vix is also Trading wex Futures vix options are also trading in us like that in India also they introduced because there was no volume they stopped so if more and more Traders buycott if nobody's trading intraday then you know exchange they will have to get out of all these things only once in a week you know only Nifty expiry even Bank Nifty even let them have all expiries also let them have Nifty Bank Nifty midcap Nifty but let it be everything on one day why every day expiry right so but I don't think that you know my video is going to have such a big impact so that the Traders all going to stop but let me warn you the Traders either you stop now or you will be thrown out of the market okay and I already heard you know people losing you know huge amount of money in the last few months and there are some smart people have actually left the market already so my simple advice okay if you are my simple advice to the me so far all my advices were for small fishes so this is my first advice to the uh big fishes or medium siiz fishes you know stop trading intraday okay especially on midcap fin Nifty and other things okay so the more you trade okay exchanges will get more business and these other countries hedge funds will take away all your money okay then you know you will be in a big trouble so I'm not saying that this has happened but there is a possibility of this happening is very very high otherwise you just give me a good reason why Market should fall okay if you think that no assume that you have a 500 CR worth of shares do you think you will put the entire 500 CR order in one go no you will not do it no sensible person will do right and in fact you know maybe you know Regulators must come out with questioning the people who are putting 500 CR order in one second right so no nothing is going to happen right so at the end of the day as I came out with a video last time you have to save yourself you cannot expect the government or Regulators to come and save you right so my simple advice don't do intraday trade and for the big people also don't do this one rupe 2 rupee option you know that's more more dangerous so that is advice you want to take it you take it because now I'm officially a senior citizen 60 plus I think I have you know Liberty to advise the people otherwise you know when I was young I always used to tell don't ask for any advice so hope you enjoyed watching this video thank you for watching

Channel: P R Sundar

Views: 354,036

Keywords: option trading, options, options india, indian f&o, fno market, options trading risks, options trading pros and cons, big fish eat small fish, options trading india, indian stock market, stock market india, stock market risks, futures & options, futures and options, options market, investor trapping, stock market operators, operators in stock market

Id: _ErXJQF6_-I

Length: 23min 58sec (1438 seconds)

Published: Sat Apr 20 2024