Welcome back to Monday.
The truncated week with 3 trading days is over. Market moved higher over the week though we saw a negative close on Thursday.
NIFTY was at 11752.80 after having touched the all time high of 11856.15 on the same day.
We saw one of our trades doing well on Thursday and that one trade brought down the losses considerably.
Life of an option buyer is full of difficulties. This time we have the problem of having trouble with a good trade.
RELCAPITAL has come in F&O ban. This ban will take away the liquidity. Second problem is of compulsory physical settlement. This is one aspect of option trading which has been messed up by the brokers. They are asking for margins from the PUT buyers also.
We had lot of discussion on the subject over last two days. The readers who missed the conversations can read it here:
Please go through the comments section also.
For similar situations in future, keep a copy of this article with you.
Till the matter is resolved by the authorities ( it will have to be done at some time as all the stocks will come under physical settlement ) , we have to face this situation in which we can not take advantage of our right trade. How unfair the life can be?
Well, today we get out of this trade at an appropriate price.
And we can not move to a lower strike because of the F&O ban.
This is the position as of close on Thursday, April 18:
New Trades for the day :
We do not give up because of difficulties.
We have seen in the past that lot of good things can happen in 4 days. ( Things can go bad too )
So we keep in doing what we have to do.
We missed a trade in EICHERMOT in the early part of this month and it was a good trade to miss as it went wrong.
Once again, this stock is giving hints to buy a PUT. It is weak over 30 days as well as over 7 days. Volatility is decent and a 3-5% decline from the current price of Rs. 21000 can be expected.
EICHERMOT PUT 20500 @ Rs. 100-120 can work out to be a good trade.
Lot Size — 25 Maximum Risk — Rs. 3000.
Keep a watch on BIOCON and BHARATFORG too.
These 4 days before expiry are going to be exciting but whether they will bring in any profit is to be decided by the market.
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.