As the expiry date approaches, option premiums are supposed to go down.
But the volatility in the market is a factor which is not allowing that to happen. Even with just 8 days left to expiry, premiums continue to remain on the higher side. That is good for the trades we have already taken but it makes finding new trades a bit difficult.
IBULHSGFIN PUT 540 could not be taken yesterday as our price level never came about. And we are not going to spend more than Rs. 2000 for these options.
So we had 4 trades which did not do well on the day market moved both ways and closed higher.
Our positions at the end of day:
New Trades :
TITAN has come in for big selling in the last one month. It had the biggest fall on the day market was recovering. It had made the 52 week high on July 01 at Rs. 1340 and had gone to a low of Rs. 1071.40 on July 11. Such falls do not happen without a reason.
Let us take a chance with a far away PUT which costs us below Rs. 2000.
We look for TITAN PUT 980 @ Rs. 2.40-2.60.
With a lot size of 750 the maximum risk is Rs. 1950.
Like all low priced options it has every chance to expire worthless but then who knows what is going to happen in the next 8 days.
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.