A new week begins.
NIFTY has already gained 193 points in 6 trading days. The all time high of 11390 may be taken out today if the market follows the trend seen in Asian Markets this morning.
We are already having the following trades:
PUT BUYER :
TATAMOTORS PUT 240
DRREDDY PUT 1950
HINDALCO PUT 195
HEROMOTOCO PUT 3100
RELCAPITAL PUT 370
CALL BUYER :
YESBANK CALL 400
L&TFH CALL 190
GAIL CALL 400
As is expected with a 200 points gain in NIFTY , CALLS are doing better than NIFTY.
With 19 trading days remaining till expiry we are in for lots of ups and downs. We stay with all the above trades and look for new opportunities.
PUT BUYER :
Looking to buy PUTS in a rising market is a tough task. One can just avoid it. But to be proved right contrary to the trend gives a very nice feeling and serves as a test for the selection process as well.
One of the weak stocks in MID CAP segment is TATAGLOBAL.
It had made its 52 week low in August 2017. It can make another low in August 2018 which will be higher than last year’s low but would suit our purpose. The recent low is Rs. 228.60. We expect the stock to go lower than Rs. 220 level before expiry.
TATAGLOBAL PUT 220 traded at Rs. 3.10 on Friday. If we can get it for around Rs. 2.60- 2.80 today, it can turn out to be a good trade if right. Loss is capped at Rs. 6300. ( Lot Size = 2250 )
CALL BUYER :
IBULHSGFIN ( India Bulls Housing Finance ) is in a very bullish trend. It is within sight of its 52 week high of Rs. 1440 achieved in January 2018.
Current price is Rs. 1377.50. Going for a strike about 8% away gives us Strike Price as 1480.
CALL 1480 was traded at Rs. 12.40 on Friday close.
If we can get it for a similar or lower price , it can turn out to be a nice option. Lot size being 500, maximum risk is about Rs. 6000.
CALL 1480 in the price range Rs. 11-13.
These are the two trades worked out for today.
Let us see how the day pans out.
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
Ravi Kumar August 6, 2018 at 9:26 am
Sir,
TataGlobal 220 PUT’s bid/ask spread was 3 to 3.15 , which i thought should be considered as a fair premium. You suggested 2.6 to 2.8… Want to know the rational….this is one thing i want to know about your rational for choosing the premium. Please guide
Thanks Again
ReplyRavi Kumar
admin August 6, 2018 at 9:32 am
Dear Ravi,
It was expected that market will open higher and TataGlobal too would open higher. Accordingly the price suggested was lower than yesterday. Right now Rs. 2.80 has been traded. If the stock price moves a bit higher today, it may be possible to get 2.60 as well. If it was trending lower, i would not hesitate to buy even at Rs. 3.20-3.50.
ReplyRavi Kumar August 6, 2018 at 9:59 am
Got it sir. Thanks. I waited and took it at 2.8
ReplyMEENAKSHSUNDARAM August 6, 2018 at 4:59 pm
Sir though it is not mandatory on your part whether quiting a trade booking loss will be informed through this blog?
ReplyMEENAKSHSUNDARAM August 6, 2018 at 4:59 pm
Sir though it is not mandatory on your part whether quiting a trade booking loss will be informed through this blog?
Replyadmin August 6, 2018 at 5:56 pm
Whenever a trade is to be exited for booking profit write about it. I have already written that the premium paid to buy the option is the maximum loss. So there is no point worrying about it.
Cheers.
ReplyWasim August 6, 2018 at 5:41 pm
I am new to options and i have been learning technical analysis as well.. As a novice trader i found that GAIL has formed a bearish engulfing pattern on todays candle.
ReplyAre we still goin to hold the call option or we should get out of it
admin August 6, 2018 at 6:00 pm
The whole purpose of my blog is to tell that Technical Analysis is not required. You will always keep getting signals contrary to what the stock does. Just a day ago, GAIL had made 52 week high. That will give you bullish signals. Today it lost significantly. What it would do over next 5 days is not known either to me or to any analyst. We can not worry about trades on daily basis.
Cheers.
ReplyDev August 7, 2018 at 7:36 am
sir we have seen that this analysis is sufficient the way we r doing it but i think to enter in the trade we should consider some technicals also like strong indicators as EMA and MACD to further increase the chances of going right in the right time as timing is important factor in Options. like you perfectly timed the june expiry trades. 🙂
Replyadmin August 7, 2018 at 7:47 am
Why complicate life when simplicity works?
ReplyThose indicators also fail equally.
Wasim Akram August 6, 2018 at 5:51 pm
And also IBULHSGFIN is forming a hanging man means bearish.
ReplyIm not trying to imply anything i just want to know if we can include technical analysis in option trading whiile going for call or put option.
admin August 6, 2018 at 6:02 pm
Same reply as to your other question except the 52 week high part.
You can use any type of analysis while entering option trades. Finally proof of success is in profits over a period of time.
cheers.
ReplyAnand Tyagaraj August 6, 2018 at 10:11 pm
Sir,
ReplyWhat is your view on RELIANCE 1300 CE, checked 30 days and 7 days. Keep hitting highs.
Available at 4.05 today, LOT Size:1000?
Volume is there, IV is about 26%.
admin August 7, 2018 at 7:27 am
Reliance is a good case for buying a Call. Only issue is the IV range. I prefer IV of above 35.
ReplyAnindya August 7, 2018 at 12:26 am
Sir,
ReplyWhy Dr Reddy & Hero Moto Corp PUT calls ? They are in uptrend in last 7 days.
admin August 7, 2018 at 7:25 am
We can not change our position every day based on how the stock moved. On the day the trade was taken, both the 30 day and 7 day trend were negative. We have to just accept the fact that the trade has gone wrong for the present.
ReplyIt happens. GAIL made 52 week closing high on Friday, made another high on Monday in the early trading and was the biggest Nifty loser for the day. We don’t jump in to buy puts in such cases.
Cheers.