In this interview with ETMarkets on the sidelines of Traders Carnival held recently in Bengaluru, Saketh also spoke about his trading style and his struggles to complete CFA while trading full-time. Edited excerpts:
You started trading when you were in class 8. How did that happen?
I was sitting in the hall and playing a video game when my father switched on a business news channel. It was the first time I came across the stock market. I could see the tickers of the companies which I knew move across the screen with a price quote next to it. I was quite curious to know what exactly these were. My father told me that they were the price one must pay to own a piece of that company. Sometimes the prices move up and sometimes they come down, you can buy them when they fall and sell them when they go up.
Being in 7th grade and fond of video games, my initial query was whether I could purchase an Xbox when its stock price dropped. This is how I came across the stock market for the first time. My interest grew towards it, and I started investing in stocks. Eventually I shifted to intraday trading, swing trading, option buying, and ultimately option selling. It has been almost a decade since I entered the markets.
You seem to be doing pretty well as a trader as well as an influencer, then why are you still pursuing CFA?
Upon graduating from Christ University in 2019, my partner and I founded Optionables on December 18th of the same year. Initially Optionables was a very small firm and we never really imagined things could turn out the way they did.
I wanted to pursue trading full-time. On the other hand, I didn’t want to end my education with B Com. One of the good courses I found in the field of finance was CFA. I enrolled for CFA and managed to clear Level 1. My second level got postponed multiple times due to COVID. Meanwhile, I started losing interest as Optionables had started growing. I gave my level two exam, but I was unable to clear it for the first time.
I plan to write the exam again this year and try to clear all the levels by 2024.
How supportive are your parents? Do they want you to settle down in a well-paid job?
During my college I got a job opportunity as a prop trader in a Mumbai-based prop trading firm through my college placements. The company had one of the highest starting packages for a B Com Graduate. Given that the company did exactly what I was interested in, naturally my parents insisted that I go for the job and get some corporate exposure before I start a similar firm on my own.
I insisted I wanted to give it a try and if it doesn’t work out well, I will search for a job after that, they were very supportive. They were ones who encouraged me to pursue Optionables and to continue my education beyond B Com.
Trading is one thing and being an entrepreneur is a different ballgame. What makes you run Optionables and help others as well make money?
Trading is just one part of the game. Only if people trust and support you, you can leverage it to grow faster.
Most importantly, what matters the most to any investor is the experience you are going to offer. If you offer excellent returns and moderate service compared to moderate returns and excellent service, eventually people will end up choosing the latter.
With these things in place, you will always have people to support and help you grow more.
On a typical day, what is your trading strategy?
We currently trade non-directional strategies, mainly straddles, and strangles. This is something which I have been doing for 4-5 years consistently and it has worked well. In 2021-22 I primarily traded straddles which are slightly hard to trade but they offer good reward for the risk taken. Now I am shifting some of the trades to strangles, especially on the non-expiry days, the trade management becomes easier, and it gives you more time off screen to focus on other things.
I would categorize my trading into three parts: positional, intraday and expiry trading.
I tend to carry very low quantity non directional trades overnight as a part of my positional trades, during the day I increase the exposure to the same trades and continue managing them, which forms a part of my intraday trades, by the end of the day I will lower the exposure again and carry the positions overnight.
On expiry days I am generally very aggressive, I tend to use my full capital for the trades and take higher risks. For a non-directional option seller, expiry offers very high probability and good risk to reward for the trades taken.
How has your trading portfolio performed in FY23?
In 2022-2023, I generated a gross return of 38% and net return of 32% (post charges) trading F&O. This was much lower compared to the average performances of previous few years. This year there was also a loss of 7% from equities, together resulting in a gain of around 25%.
This financial year I traded for 248 days, out of which we were profitable only for 140 days (56.45%) and we made a loss on 108 days (43.55%). The trades had an average risk to reward of 1 : 1.05. The total charges paid this FY was 6% of the total capital.
I am slightly disappointed with current year’s performance considering many trades could have been handled in a much better way which could have resulted in both a higher probability and better risk to reward.
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