Nithin Kamath, the co-founder of Zerodha, shared tips and tricks on achieving success as a trader, which hinges on navigating challenging periods. He acknowledged that actively trading in the market represents one of the most toughest paths to making easy money in life. In a post shared on X (formerly Twitter) on Wednesday, Kamath highlighted the occurrence of 'sudden spikes', which are rapid and significant increases in option prices, during expiry days over the past 12 months or more. He noted that traders have consistently found themselves unprepared for these developments.
He wrote, “I've said it earlier, trading actively is the toughest way to make easy money in life. The trick to being a successful trader is to survive the bad days. Over the past year or so, there have been sudden spikes in option prices on expiry days, and traders keep getting caught off guard.”
He also shared a blog post in his tweet and added: “One way to ensure you don't lose money due to volatility is to trade fully hedged options strategies, such as spreads. Here's a post by @abidsensibull on how spreads help. Of course, this alone won't help. You also need to ensure that you have you have a strategies to manage risk, size your positions appropriately etc.”
Kamath's post generated a lot of likes and comments. Several X users came forward to share their take, one user wrote, “Sudden spike on premiums on expiry days is one thing. Sudden drop in India VIX. Fell 20% 2 days back to 10.5 per cent levels! Options buyers, feeling safe with their trend assessment lost big even on a trend helping day! And of course algorithm players close to trading engine milk the rest! Jane Street s of the world! Hedges / Spreads helpful in mitigating risks. But then you don't make money either! What is it for?”