The setup
This was the third manual, chart-based breakout I've taken in MIDCPNIFTY in a week. The first two — 31-07 and 03-08 — both paid. This one didn't. That's worth saying up front, because the point of this journal isn't to show the two that worked and quietly forget the one that didn't.
The read was bearish: a level broke down on the chart, and I expressed it the way the breakout bot does — short the move by selling a call. What the bot doesn't do, and what I did here, is take the trade off a chart with no written stop, no written target, and no backtest behind it. It's the discretionary setup I keep flagging as the weakest thing I do.
The trade
Selling the 14900 CE outright would have needed naked-option margin I didn't want to commit to a discretionary punt. So I bought the 15100 CE against it. That turns the position into a bear call spread — and, as it happens, into the only reason this post is about ₹1,935 and not something worse.
| Leg | Strike | Action | Premium | Lots | Units |
|---|---|---|---|---|---|
| Short call | 14900 CE | Sell | 162.95 | 2 | 240 |
| Long call (hedge) | 15100 CE | Buy | 84.85 | 2 | 240 |
MIDCPNIFTY lot size is 120, so 2 lots = 240 units.
The math
| Metric | Value |
|---|---|
| Net credit / unit | 162.95 − 84.85 = 78.10 |
| Total credit | 78.10 × 240 = ₹18,744 |
| Spread width | 15100 − 14900 = 200 |
| Max profit | ₹18,744 (below 14900) |
| Max loss | (200 − 78.10) × 240 = ₹29,256 (above 15100) |
| Breakeven | 14900 + 78.10 = 14978.10 |
| Result | −₹1,935 (≈ 8 points of spread value against me) |
The breakout failed to follow through; the index pushed back up toward the short strike instead of away from it, the spread widened from the 78.10 I sold to roughly 86, and I closed it. About eight points of spread value, ₹1,935 in money.
Why the hedge is the whole story
Run the same trade naked. I sell the 14900 CE at 162.95, the index reclaims the level and grinds higher, and now I'm short a call with nothing above it. The same adverse move that cost me eight points on the spread costs more on the bare call, and — this is the part that matters — it has no ceiling. A bear call spread caps my loss at ₹29,256 by construction. A naked 14900 CE caps it at nothing.
I did not buy the 15100 CE because I'm disciplined. I bought it because I couldn't afford the naked margin. The margin constraint enforced a risk control I don't reliably impose on myself. That's a lucky accident, not a process, and I'd rather have the process.
The part I don't get to feel good about
The loss is small and the hedge contained it, so it's tempting to file this as a non-event. It isn't. This is still a discretionary breakout with no rule written down anywhere. When it won on 31-07 and 03-08, the absence of a rule didn't cost me. Today it did. The rule doesn't change based on the outcome — a setup with no stop and no target is the same shaky setup whether it pays or not.
There are two honest options here, and they're the same two I wrote down after 03-08: either turn this chart read into a testable rule and put it in the bot, or stop taking it. Taking it a fourth time on feel, and hoping the hedge keeps saving me, is not a third option.
The pair I don't get to call diversification
On the same day I put on a BankNifty bear call spread — same structure, same margin-forced hedge, same bearish direction. That one won ₹1,163. It's tempting to say I was "one for two across two instruments." I wasn't. Two bearish call spreads on two index products in the same session are one directional bet expressed twice, not two independent trades. Netted, the pair did −1,935 + 1,163 = −₹772. The second instrument didn't diversify the first; it just doubled my exposure to the same view. This is the 08-07 tariff-shock lesson in a smaller, cheaper form: correlated positions are one bet, and I still don't have a single net-exposure view that would have shown me that before I clicked twice.
Disclaimer
This is a personal trading journal. It is a record of my own trades, my own money and my own mistakes — nothing more.
Nothing here is a trade recommendation, a tip, a call, or advice of any kind. I am not a registered adviser and I am not qualified to tell anyone what to do with their capital. The strikes, premiums, entries and exits above are what I did, not what you should do.
If you read this blog and place a trade because of it, that trade is yours. I accept no responsibility for anyone else's losses. Do your own research, size for your own risk, and understand that options can lose you more, faster, than you expect.