The weekend is gone.
Friday’s heady feeling of the NIFTY all time high must have dissipated over the two holidays. My question to traders always is the same— Did you make money when NIFTY made a new high ?
The answer is always slow in coming and the obvious reason is that no profits were made. Why to bother about NIFTY highs if our trades are not doing well. Let us leave talk about NIFTY, FII Buying and Selling, RBI Policy , Federal Reserve to the TV people. Nobody ever made money from this talk unless you were paid by the channel. We should focus on what we have to do.
PUT BUYER SELECTION :
The job of PUT BUYER is becoming difficult as the market is rising. But a job s a job and needs to be done. Method is decided. One selection is to be made.
Let us do it.
A look at the NIFTY 50 laggards tells us that Pharma Sector is not doing well. We select DRL ( Dr. Reddy Laboratories ) for buying a PUT.
Current price is Rs. 2083 and the 52 week low is Rs. 1887.
We go for PUT 1950 at Rs. 36.00. Lot size is 250, so maximum risk is Rs. 9000.
Hopefully, the sector and the stock shall stay weak and the trade should work out well.
CALL BUYER SELECTION :
Nothing comes easy in the market except confusion. To get out of this confusion and to make choices for executing the trades is the daily job of a trader. It needs to be learnt, practiced and practiced and practiced. Practice repeated many times will make us good.
Among the NIFTY NEXT 50 stocks, L&T Finance Holdings ( L&TFH ) is a good gainer over the last 30 day period. If the NIFTY rally continues, Financials are the most likely leaders. This stock should do well.
We go for a CALL which is about 8% away from the current price of Rs. 176.20.
CALL 190 at around Rs. 2.50 would be my choice.
Lot size is 4500. Maximum risk is Rs. 11250.
Earlier Trades :
Just to recall our trades on Day 01 of the series were:
TATAMOTORS PUT 240
YESBANK CALL 400
We shall proceed slowly this month. There is enough time till August 30, 2018.
An Option Buyer talking about time in a positive way is rare. Let us give it due respect. Price move in our direction with good volatility within time is the key.
As the month unfolds, we shall know the impact of all the factors mentioned here.
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
Manoj July 30, 2018 at 9:02 am
Sir , what @ ITC Call 320
ReplyRoss July 30, 2018 at 9:04 am
Sir, why did you choose this two stocks instead of others is question to me.
For example in PUT – LUPID and HEROMOTOCO has does bad than DRREDDY, but as you said choice is DRREDDY considering sector performance.
But in CALL – BANKBARODA has done so well in last 30 days and being in finance sector, shouldn’t we consider that above L&T Finance Holdings?
Replyadmin July 30, 2018 at 9:18 am
Good question.
ReplyOnce we identify weakness then the problem is — which stock to select for trade. Market is not simple arithmetic. It is an art form as well with no guaranteed results even when all factors are aligned. While selecting a stock I have to see the likelihood of the 8-10% away stock coming into money based on previous high/low, whether the current up/down move is continuous over a period of time or one day impact of a news. Premium too should be reasonable so that we do not lose too much if the trade goes wrong.
You could be equally right in selecting LUPIN PUT or BOB CALL. That is your decision. These are my decisions. Both can be right and both can be wrong.
I may select any of those tomorrow or a day later.
Cheers.
Sandeep Kharat July 30, 2018 at 11:09 am
M&M 860 PUT @7.10 looks good?
ReplyShrinivas S Tate July 30, 2018 at 6:23 pm
Sir,
Replyconsidering the result event @ Tata Motors i have 300 Call & 240 Put. @ IciCi B – 350 Call & 230 PE for August series. Tried to have a safeguard approach..How you look at this set up.
Devendra July 30, 2018 at 8:50 pm
Dear sir,
Tech Mahindra and Indigo results are not as expected.. Way below expectations.
ReplyDo you see any put trade here?
Regards,
Devendra
Madan Mohan M July 30, 2018 at 11:33 pm
Tata Motors is sell only, I loss lot of money due to duality in mind, Henceforth I will do any trade If I have dual thoughts of that trade. Don’t not think Public sector banks are really going up, they will be dumped by big brothers once purpose is done. 10 years back Tata motors and SBI used to do what HDFC Bank and BajajFinse is doing now.
ReplyMadan Mohan M July 30, 2018 at 11:39 pm
Many banks have provided huge provisions in March 2018 due change in policies in recognizing NPAs, obviously they should show some profits this quarter, I can’t consider BOB worth buying at this price, my personal opinion only,
ReplyMadan Mohan July 30, 2018 at 11:55 pm
As per rumours, lot of bad news in pipeline for Dr Reddys, I am not sure of that, but a fall from 2340 to 2090 in a single day on 16th July is something that can not be ignored. There could be some valid reason for that fall (other than what we know on moneycontrol). Side effects of that fall may reflect in this expiry. Fingers crossed.
Reply