After a flattish Monday, NIFTY made a big down move on Tuesday.
Sometimes, even such a big move does nothing for our trades. Luckily it was not that kind of day.
M&M, COALINDIA, IOC and VEDL moved lower while TITAN and SUNPHARMA were nominal gainers for the day.
We need a real big move in at least two of these stocks ( down move of about 5-6%) which is not happening. Such moves are happening elsewhere in stocks like YESBANK and ZEEL but that does not help us.
Just for the sake of information, let us have a look at the Implied Volatility of YESBANK options for this month.
For PUTS, it is more than 200. Who would trade such risky options?
The number of trades tells us that people are trading these options but it is best to stay away from such volatility. Premium at these levels is a killer.
Coming back to our trades, this was the position at close yesterday:
Picture got better with the down moves. Let us hope it keeps getting better.
New Trade :
I am going for a high IV trade today. IV is higher than 70 but not like that seen in YESBANK.
The stock is ZEEL. It meets the 30 day and 7 day weakness criteria for buying a PUT. Volumes are alright, the problem is with IV and we are willing to make an exception this time.
Current price is near Rs. 270. As the stock is very volatile, we go for a PUT about 10% away from the current price. That would be PUT 240. Those readers with a higher risk appetite may look for PUT 250.
ZEEL PUT 240 @ Rs. 5.00 -5.40 would be my trade. Lot size 1300, maximum risk Rs. 7020.
Those opting for PUT 250 can try it for a price between Rs. 7.30-7.60.
We stay with the trades with the hope and belief that market will reward our patience.
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.