## My Options Trading Journey: From Confusion to Capitalization – Vivek Bajaj
My introduction to options trading began with a book – “Options as a Strategic Investment” by Lawrence G. McMillan. I frist read it in 2002,shortly after passing my Chartered Accountancy exam and before preparing for the Common Admission Test (CAT). This very copy marked the start of my exploration into the world of options.
Options trading had recently launched in India in 2001, beginning with index options and quickly followed by stock options. In those early days, monthly contract volume barely exceeded a million trades, and activity was largely driven by institutional and proprietary trading desks. Initially, the concepts felt overwhelming. I remember feeling like Ishaan Avasthi from *Taare Zameen Par* – completely lost and utterly confused.
Though,revisiting the book unlocked a clearer understanding of potential opportunities. One particularly accessible strategy was the Call-Put Parity (CPP) arbitrage. It felt like a readily available opportunity, a ”free lunch,” for those equipped with the right technology and understanding. This advantage stemmed from a common misunderstanding of Call and Put options – specifically, the frequent mistake of selling a Call option when a Put option was intended. Sharper traders quickly identified this discrepancy and capitalized on it, and I was among them during my brief foray into options trading.
Ultimately,my focus shifted towards pursuing an MBA,and I paused my trading activities. I returned to trading in June 2006, but this time with futures contracts, which I found more appealing.I traded commodities and currency until 2013,after which I transitioned to swing trading in the cash segment.
Over time, the firms I co-founded, Kredent Trading LLP and iRage, began to leverage the growing opportunities within the options market. The expanding ecosystem,fueled by increased retail participation and margin benefits on options spreads,amplified these possibilities.
India’s options market has experienced remarkable growth, increasing from less than a million trades a month to representing 84% of global options volume. Though, data from the Securities and Exchange Board of India (SEBI) revealing that 90% of retail traders lose money serves as a crucial reminder that meaningful improvements are still needed.For anyone looking to delve into the world of options, I highly recommend “Options as a Strategic investment” by Lawrence G. McMillan. It remains a valuable resource for understanding this complex market.
