May 23, 2019.
The big election exercise comes to a conclusion today with counting of votes to begin at 8:00 am.
We shall know by evening as to what would be the composition of the new government. Exit polls have indicated a continuation of the present dispensation. The actual outcome may be same.
For the market, elections results are over hyped.
Politics does not have a role in the market except to create knee jerk reaction situations and we may see that kind of situation today. Wild swings on either side should be expected though not of the magnitude we saw in 2004 or 2009.
Yesterday was a subdued day for the market with NIFTY moving with volatility within a 100 point range. It closed with a gain of about 28 points.
We saw some real funny option price moves yesterday. SBIN closed higher but PUT 280 moved up to Rs. 1.35 from Rs. 0.70 on Tuesday. BHARTIARTL too closed higher but the PUT 300 moved up from Rs. 2.00 to Rs. 2.80. Never saw this kind of trades earlier.
If we find same kind of moves today, I would like to exit SBIN 280 PUT at a loss too with a reasonable price as I do not see this stock coming down to Rs. 280 or below on or before May 30. This would be against my normal method of not caring for the losses but here the price has gone beyond the range from where it can come back based on its normal moves. Stranger things have happened in the past but expecting miracles every time is not right.
This is our status as at close yesterday.
Almost same as previous day.
What is to be done today ? :
The best thing to do today would be — NOTHING.
If some of our trades come into profitable situation today, that would be the time to cash the trade. Use your own judgement. We can not have a strategy for wild fluctuations. We are in good position right now and even if things go very bad from here, we shall still end up with a profitable month. The key is to protect the profit by staying diligent.
All the best for the day.
Trade cautiously, trade profitably.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.