This is how NIFTY closed at November 2018 Expiry.
It moved up by 734 points.
It is already past tense. What now?
It actually does not mean a thing to traders if it does not make money. Let it go in any direction but our trades should be right.
But it is fashionable to talk about the Index so let us also do that ritual. As stated many times earlier, today’s rally is actually not a rally. Look at the Top 10 Gainers for the day:
Except KOTAKBANK, none of these stocks belongs to 10 Top Weight Stocks. And KOTAKBANK is at number 9. I agree that those stocks have also gained for the day but they have not led the up move today. And when the leaders do not lead, the rally fizzles out. We have seen this earlier and we may see that again.
These were my views and I may be proved wrong like many other times in the past. I am happy if i am wrong and do not lose money.
Coming to December Expiry trading, there is the outcome of State Elections which shall be casting its shadow on the market moves. We can expect volatility till the results are out. That makes our task more difficult. Well, option buying was always difficult. We are trying to make it simple but some facts can not be changed.
Trades for the day :
We failed with CIPLA in November Expiry. Time to change the prescription. This stock has been weak over 30 day period as well as 7 day period. It qualifies for buying a PUT.
Current price is Rs. 484.50. PUT 450 at a premium of Rs. 8.00-9.00 is a good choice. Lot Size 1100, Max Risk Rs. 9900.
It made a down move today towards close. On November 26, it had gone below Rs. 600 for a while and then recovered. With INR gaining strength against the USD, a similar move mat happen again.
PUT 620 at Rs. 6.50-7.00 would be my choice. Maximum risk in this trade is Rs. 8400 lot size being 1200.
It came up with good results two days ago and the stock price moved up to Rs. 246.90 on November 28. It came down to a low of Rs. 222.85 on Expiry day and closed at Rs. 228.55. It is trading very close to the 52 week low of Rs. 221.60 made on October 26, 2018.
The price moves clearly indicate that market is not impressed by the stock as it lost 4% on a day NIFTY gained 129 points.
Only problem is that the stock is very volatile and we have to bear the cost of high premiums.
PUT 210 around Rs. 8.00 is my choice for a trade. Lot Size 1500, Maximum Risk Rs. 12000.
This sums up the three likely trades for the first day of the series.
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.