Nifty ended flat yesterday.
Monetary policy was announced. A 25 basis point cut was announced and it did little to cheer the market. Since January Expiry Nifty has gained 239 points.
We do not have anything to feel happy about as our trades went from bad to worse. January 06 was bad and yesterday was very very bad.
In a flat market, we were flattened.
The stocks picked for buying PUTS were the weakest stocks in the market when the selections were made. All of them decided to reverse the trend over this two day period. And they did it with a vengeance.
Our trades are in a real sorry state now. Let us look at the numbers.
We paid big premiums because of the high volatility. The prices went against and volatility came down slightly. The result is known to us.
What do we do now ? :
Who are we? Small humble traders benefiting from a method and the rewards the market bestows on us. Whatever we try to do is not going to change things.
We stay humble, we stay calm. We keep doing what we do and trust the market to do good for us. Such reversals are to be taken as a lesson in humility. It is way of market to tell us not to be proud of the little success we achieve.
We have been in similar situations in the past and have mostly come through successfully except in August and December 2018. Keeping the belief is important in such situations.
New Trade for the Day :
Reliance Capital and Reliance Infra have been my favorite stocks for buying PUTS. This time I thought to postpone the trade for a few days and missed the bus.
Our favorite stocks somehow give us some profit.
Another favorite is IDEA.
Yesterday it went up by more than 8%. But when I looked at 30 day position, it is still negative by 11.19%.
It does not show weakness in the 7 day period. Naturally the 8.5% gain yesterday has changed that. This time I am choosing to ignore the 7 day criteria because of our familiarity with the stock price movement.
IDEA PUT 30 @ Rs. 0.90-1.00 would be my trade today. Lot Size 12000, Maximum Risk Rs. 12000.
Stay calm, stay cautious. Keep the belief.
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.
Vishal February 8, 2019 at 8:35 am
Sir, I was startled by Hindpetro, despite the weaker results it went against.Reply
That too just on the day you mischievously explained story about Yesbank. Market is strange. Market is interesting. Staying with beliefs is the only way out before it slashes your head out of money.
Yash February 8, 2019 at 10:49 am
Bank of India seems like a good put buy doesn’t it?Reply
Divyank February 8, 2019 at 12:18 pm
I seriously hope if we stick to some weak stocks from the day1 of options trading in 2018.Reply
vishal agarwal February 8, 2019 at 6:30 pm
M&M announces Q3 results – https://www.moneycontrol.com/news/business/earnings/m-tractor-ebit-up-6-3503581.htmlReply
Let’s hope to see new lows on M&M in the coming days.
admin February 8, 2019 at 10:33 pm
The results were out during trading hours and there were quick moves in both directions. We do not know what is the likely direction but would gladly accept a 4-5% down move.
vishal agarwal February 9, 2019 at 9:26 am
Yes sir and even Grasim lost its results boost to come down sharply.Reply
Samprati Jain February 8, 2019 at 7:24 pm
I have bought HindPetro 210 Put and averaged it at 2.56.
What should be the exit target? Any recommendations sir?
Or should I just wait till exipry?
admin February 8, 2019 at 10:28 pm
Current price is Rs. 2.00. If the trend continues on Monday , the option can become profitable. Exits are considered only after the option becoming In The Money. Let us wait till the price falls below Rs. 210.Reply
Suman February 8, 2019 at 10:50 pm
Is it advisable to average any of our current positions on Monday? Please adviseReply
Nilesh S February 9, 2019 at 6:16 pm
SEBI issues eligibility criteria for physical settlement of stock derivativesReply
According to the circular, in addition to the existing schedule of stock derivatives, the derivatives on stock meeting the eligibility criteria specified by the regulator will also be physically settled from the new expiry cycle.
Anand February 9, 2019 at 10:46 pm
Can you please elaborate what this means? Unable to make out anything from the article. Does it affect us (Option buyers)?Reply
admin February 9, 2019 at 10:56 pm
It does not affect us immediately. NSE has to take certain decisions based on these parameters from next month expiry. Such stocks will then be notified for physical settlement. We shall cross the bridge when we come to it.