April 2019 — We Buy Options — Day 14

Today is last trading day of this week. Market will be closed tomorrow on account of Good Friday.

Let us see whether our trades have a good Thursday today.

NIFTY closed at record high on Tuesday. Let us see how the day pans out. The day may have more upside momentum or we may see some profit booking. Asia is trading slightly in the red as of this morning. Whether that trend impacts our market is yet to be seen.

We would like RELCAPITAL and INDUSINDBK to continue doing what these stocks did on Tuesday. BHARATFORG saw some weakening but we need a strong down move. same in BIOCON. These 5 remaining days till expiry are the make or break days for our trades.

We shall not be taking any new trades today. It is important to preserve your capital when things are not going well.

I am sharing a lesson from one of the master traders, Richard Dennis:

SGX NIFTY is flat. That actually tells us nothing.

Let the day begin. Keep a watch on all of them but a bit more on RELCAPITAL.

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.

Comments

Azar Shaikh April 18, 2019 at 9:41 am

Sir Moved to 160 PE Reliance Capital

PRAKHAR April 18, 2019 at 10:01 am

Whether we gain or lose money.
We are at last following a system.
We saw how M&M cheat with us One month & rewards us next 2 month for continuously following system.
It is always better to follow system rather than an opinion towards market.

Pranav April 18, 2019 at 10:11 am

Pramod Sir,
Some of the options have settlement mode of expiry as CASH and others as PHYSICAL SETTLEMENT. What is the impact on expiry?

Chirag April 18, 2019 at 10:28 am

I think Relcapital is under Physical settlement starting this month. I cant find NSE circular but got this link which was shared some time back. https://docs.google.com/spreadsheets/d/1XDcruUPTawKeC7AQyoIJDN7tvT9SaLv-YuTAzjDnYI4/htmlview#gid=0
Some brokers might auto squareoff the contract if shares are not present in demat for delivery.
I missed relcap for this month but will be very happy if others can make some money.

YOGI April 18, 2019 at 11:28 am

Thanks sir for sharing valuable Write up ….

vishal agarwal April 18, 2019 at 12:16 pm

RelCapital 5Rs more to go for 150. Placed sell order at 28.5 for 170PE. Hope for the best!

Azar Shaikh April 18, 2019 at 1:26 pm

Hi vishal better to book and move 150 PE.
Reply
- vishal agarwal April 18, 2019 at 3:35 pm
  
  My sell order at 28.5 was not executed even though the low made was 145. Lets hope the trend continues next week as well.
  Reply
  - Dev April 18, 2019 at 10:09 pm
    
    Don’t hope to much pls, I am satisfied with the covering it gave to all loss overnight.
    Reply
    - vishal agarwal April 18, 2019 at 11:08 pm
      
      You are right. Even I wanted to book profit. But my thought process was like:
      1. This is the only trade out of all which has come good so lets try to extract max juice possible.
      2. as you might be aware Axis capital trustee is liquidating 30lakh pledged shares per day of relcap so its not unfair to hope for lower levels.
      3. There is not much time value in this contract however the lower strikes have too much time value. Even if Relcap shows level of 130-135 by expiry which is 4 days away, we might even get 40rs premium.
      Your thoughts please?

Dev April 19, 2019 at 8:06 am

@vishal it’s very near the expiry and 150pe (which is 3%away) had 9rs. means 14k rupees. Current condition looks like it still has selling pressure as we saw in the last half an hour. There is generally more volatility in case of relcap once it starts, as we have seen in past experiences so I am looking for a gapdown or some more selling on monday. But on the cost of very limited loss to keep me alive for next month.

vishal agarwal April 19, 2019 at 9:23 am

I got this message from my broker–
Your EQ margin utilization has reached 2072.66% of your available balance. Add funds on kite.zerodha.com/funds immediately to avoid square off.
— This margin will keep on increasing till expiry day. Looks like I will have to anyways square off this PE else my position will get auto squared off by broker. For now I have dozed off the fire but this margin might increase to 100% of contract notional value, which I cannot put in.

admin April 19, 2019 at 9:30 am

It maybe because of RELCAPITAL ITM PUT option. Full notional value is being demanded as margin.
We have to live with this nonsense way of trading for sometime till the brokers come up with something better.

Anyway, the broker can not square off before Monday.

cheers.
Reply
- vishal agarwal April 19, 2019 at 9:39 am
  
  Ya broker might Auto squareoff on monday if the margin increased from here. I have deposited the above margin for now.
  Reply

Azar Shaikh April 18, 2019 at 9:41 am

Sir Moved to 160 PE Reliance Capital
PRAKHAR April 18, 2019 at 10:01 am

Whether we gain or lose money.
We are at last following a system.
We saw how M&M cheat with us One month & rewards us next 2 month for continuously following system.
It is always better to follow system rather than an opinion towards market.
Pranav April 18, 2019 at 10:11 am

Pramod Sir,
Some of the options have settlement mode of expiry as CASH and others as PHYSICAL SETTLEMENT. What is the impact on expiry?
Chirag April 18, 2019 at 10:28 am

I think Relcapital is under Physical settlement starting this month. I cant find NSE circular but got this link which was shared some time back. https://docs.google.com/spreadsheets/d/1XDcruUPTawKeC7AQyoIJDN7tvT9SaLv-YuTAzjDnYI4/htmlview#gid=0
Some brokers might auto squareoff the contract if shares are not present in demat for delivery.
I missed relcap for this month but will be very happy if others can make some money.
YOGI April 18, 2019 at 11:28 am

Thanks sir for sharing valuable Write up ….
vishal agarwal April 18, 2019 at 12:16 pm

RelCapital 5Rs more to go for 150. Placed sell order at 28.5 for 170PE. Hope for the best!
- Azar Shaikh April 18, 2019 at 1:26 pm
  
  Hi vishal better to book and move 150 PE.
  - vishal agarwal April 18, 2019 at 3:35 pm
    
    My sell order at 28.5 was not executed even though the low made was 145. Lets hope the trend continues next week as well.
    - Dev April 18, 2019 at 10:09 pm
      
      Don’t hope to much pls, I am satisfied with the covering it gave to all loss overnight.
      - vishal agarwal April 18, 2019 at 11:08 pm
        
        You are right. Even I wanted to book profit. But my thought process was like:
        1. This is the only trade out of all which has come good so lets try to extract max juice possible.
        2. as you might be aware Axis capital trustee is liquidating 30lakh pledged shares per day of relcap so its not unfair to hope for lower levels.
        3. There is not much time value in this contract however the lower strikes have too much time value. Even if Relcap shows level of 130-135 by expiry which is 4 days away, we might even get 40rs premium.
        Your thoughts please?
Dev April 19, 2019 at 8:06 am

@vishal it’s very near the expiry and 150pe (which is 3%away) had 9rs. means 14k rupees. Current condition looks like it still has selling pressure as we saw in the last half an hour. There is generally more volatility in case of relcap once it starts, as we have seen in past experiences so I am looking for a gapdown or some more selling on monday. But on the cost of very limited loss to keep me alive for next month.
vishal agarwal April 19, 2019 at 9:23 am

I got this message from my broker–
Your EQ margin utilization has reached 2072.66% of your available balance. Add funds on kite.zerodha.com/funds immediately to avoid square off.
— This margin will keep on increasing till expiry day. Looks like I will have to anyways square off this PE else my position will get auto squared off by broker. For now I have dozed off the fire but this margin might increase to 100% of contract notional value, which I cannot put in.
- admin April 19, 2019 at 9:30 am
  
  It maybe because of RELCAPITAL ITM PUT option. Full notional value is being demanded as margin.
  We have to live with this nonsense way of trading for sometime till the brokers come up with something better.
  
  Anyway, the broker can not square off before Monday.
  
  cheers.
  - vishal agarwal April 19, 2019 at 9:39 am
    
    Ya broker might Auto squareoff on monday if the margin increased from here. I have deposited the above margin for now.

share

April 2019 — We Buy Options — Day 14