Yesterday the market had a steep, nose-down fall.
This morning it initially looked like a continuation of the same bearish momentum.
But instead of continuing lower, price reversed sharply and presented me a valid setup according to my rules.
The trade required me to go against the prevailing trend.
There was no hesitation. No bias.
My system signaled a put short — so I executed.
The stop loss was hit.
And that was completely fine.
Because it was a rule-based trade.
When the Market Started Covering Shorts
After my stop loss, pullback traders shorted the call option.
The market reversed again and took their stops as well.
At that moment, it became clear: the market intended to cover yesterday’s shorts.
Another setup formed — again against the trend.
My system signaled.
I shorted the put.
The Execution Mistake: ITM vs ATM Put
This is where I made a mistake.
Instead of shorting the ATM put, I accidentally shorted an ITM put.
- ITM options carry higher intrinsic value
- Higher delta
- Usually higher ATR
- Faster price movement
I noticed the mistake but chose not to interfere mid-trade.
My reasoning was simple:
- If the stop hit, the ITM strike would hit earlier anyway.
- If the trade worked, the ITM strike would reach target earlier.
Risk was predefined.
I accepted the consequence and let the trade play out.
Zero Retracement Move
After entry, the market moved with zero retracement.
There was a brief consolidation, then momentum continued.
The ITM strike hit target before the ATM strike would have.
Eventually, the ATM strike also reached its target.
Mistake acknowledged.
Execution respected.
Key Lessons from This Nifty Options Trade
- Trading against the trend is not wrong — trading without rules is.
- Short covering moves can be sharp and clean.
- Strike selection matters in options trading.
- Do not interfere mid-trade out of emotion.
- Execution discipline is more important than perfection.
Why ITM vs ATM Strike Selection Matters
Many traders underestimate strike selection in options trading.
- ATM options provide balanced premium movement.
- ITM options behave closer to the underlying due to higher delta.
- ITM strikes can hit stops faster.
- ITM strikes can also reach targets faster.
Understand what you are shorting — especially when you trade short premium strategies.
Final Thought
Losses are normal.
Mistakes are normal.
Breaking rules is not.
The edge is not prediction.
The edge is execution.