We saw both NIFTY and BANKNIFTY moving in a narrow range throughout the day. And at 14:50, all the troubles of previous day were forgotten. A day earlier, 25 basis point cut in the interest rates did not enthuse the markets. On Friday, nothing mattered.
Just look at what BANKNIFTY did in the last part of the day.
Trying to find reasons is just an intellectual exercise which achieves nothing. What could change in a day to make the markets behave in such manner. Probably all the NPAs of banks just became good loans. Or suddenly there is a huge demand of loans from credit worthy borrowers? Forget it, there is no point in discussing. Let us leave it to people on TV.
Strategies are meant to take care of these kind of moves.
And it did.
As the prices of HDFCBANK and KOTAKBANK moved higher, sold PUTS came down in value.
So did the bought PUTS in BANKNIFTY.
We are supposed to make profit from the difference between the two type of trades. And Friday was a day which ended slightly in the green.
As more time is passed with both way movements, the profit will be added.
This is the current status:
Again, we have to just sit tight and do nothing for the day.
Let us just do that.
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.