On Friday, Feb 15, we saw NIFTY go down by 120 points and then recover 100 points from there. It was 6th day of NIFTY losses. For the current expiry the score so far is Gains — 5 Days, Losses — 6 Days.
It looks like that today the score will be even at 6-6.
On Friday, we had some of the trades going our way.
M&M made yet another 52 week low. It recovered along with the market but closed lower than previous day.
HEROMOTOCORP made a sharp down move just before close. Let us hope that the trend continues.
BHEL and IDEA remained lower and did not move up by much when NIFTY was moving up.
L&T moved higher and our PUT 1200 lost some value.
GRASIM made new 52 week low and partly recovered.
ZEEL PUT 340 now looks so far away that we should not expect anything from this trade. But do we get out? Let us not worry about that. Anything can happen with options.
Well, we were looking at a loss of about Rs. 9000 on Thursday. A single day made a significant difference and the position on Friday close was:
We are in a good place now.
I would suggest getting out of IDEA 30 PUT at around Rs. 2.30-2.50 ( if this price occurs ) and move to PUT 28. This is a very volatile stock and it would be prudent to book some profit.
Similarly, if M&M PUT 630 sees a price of Rs. 18-20, let us move to PUT 610 or 600 depending on the price to be paid and our risk apetite.
HEROMOTOCORP PUT 2700 can be exited near Rs. 100 ( again, if that price happens ) and we move to PUT 2600.
These are suggestions for protecting part of the profit, whether we get the opportunity or not is entirely up to the market.
New Trade for the Day :
Pharma Sector has suddenly turned into a weak sector with DRREDDY leading the way. We shall not touch that stock because of the wild moves.
Let us stay with our earlier prescription which worked well for us. SUNPHARMA is down over 30 days as well as 7 days. It meets the Implied Volatility requirements and has good volume in options.
Current price is around Rs. 423. We look for a down move of about 5% over next few days.
SUNPHARMA PUT 400 @ Rs. 3.80-4.50 would be a good choice to cash this kind of move.
Lot Size — 1100 Maximum Risk — Rs. 4950.
Let us find out whether this prescription works for our trades.
As I write SGX NIFTY is up by about 22 points. Asia Markets are trading in the green. We may see some of our trades going wrong today. But then, what is new? That happens to us almost everyday.
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.
Alok February 18, 2019 at 9:03 am
Sir, Escorts is weak as well. Having already booked a healthy profit in march puts, I will be re-entering the same.Reply
Tharik February 18, 2019 at 9:29 am
Got SUNPHARMA 400 PUT @4.5Reply
dev February 18, 2019 at 4:58 pm
ZEEL got no chill.Reply
admin February 18, 2019 at 5:23 pm
We know that. But why the concern about a trade gone wrong. Let us stay focused on the right trades.
Samprati Jain February 18, 2019 at 5:11 pm
Entered M&M 610 Put @7.
arnab February 18, 2019 at 8:00 pm
I have bought a indigo 1100 feb pe @21..lets see how it goes, with your blessings sir….Reply
Raveendran K A February 19, 2019 at 8:34 am
Indigo is taking support at 1100 but the outlook remains bearish. may break that level.Reply
A R February 18, 2019 at 8:26 pm
Sir, how do you decide at what price the option should be bought e.g. your recommended price for Sun Pharma today was Rs. 3.80-4.50. Based on your past selections my understanding is that you try to buy around previous day’s close price. Please throw some light on this.
Thanks in advanceReply
admin February 18, 2019 at 8:31 pm
Mostly I go by previous day closing price. A little difference at buying time does not matter. Price at exit is the key to success. We are looking for 300-400 per cent. About 2-3 per cent at buying will not make a difference.Reply
dev February 19, 2019 at 8:09 am
Sir, If I entered 210pe in hindpetro when it reached to 214 day before yesterday after exiting 220pe to cash out some money. Is that wrong way?Reply
Decision was done that way as I didn’t want to bear more loss in case of reversing.
admin February 19, 2019 at 8:17 am
That is exactly the right way of trading. I have already done the same in case of M&M.