July 2018— Options Once Again — Day 08

NIFTY moved up by 80 points yesterday.

We knew in the morning yesterday that the day was going to be bad for us and it was. Stock price going up is one problem for the PUT holder and the day just passing with no movement is another loss.

Good thing among the bad ones yesterday was that BHEL, BHARTI and to some extent ICICIBANK ( it went up slightly ) did not participate in the up move. In these cases too the Options lost some value. That is how option pricing works and we have to take the hit.

All others did not do well. RELCAPITAL actually made an up move of more than 4% at one time and one of our profitable PUTS came back into the red. What will it do today? Come back lower or keep going higher. We shall know in the course of the day. Trying to know from the price action and charts does not give any sure outcome. At best it is a hopeful guess. It can be right and it can be wrong.

SBIN, PNB were usual culprits for us yesterday as well and so was TATA MOTORS.

UPL trade suggested yesterday was possible to execute at Rs. 8.00. It went lower after that but ended the day at Rs. 8.15. It is not shown in the status chart below.

Not a good picture at all.

What do we do now?

Apart from these 7 trades we are having UPL PUT 600 as well. With 8 PUTS and the rising market we are looking to make profits. One could not be more ambitious.

Do we go for some CALLS?

That can be a solution to the problem. But if the market reverses from current position our efforts get nullified.

No new trades for me at least today. Situation will be assessed at the end of day ( may not be any better than yesterday ) and new trades decided after that.

As of 8:00 am, SGX NIFTY was up by 33 points. Again not a good sign for us. But we have to live with whatever the market decides to throw at us.

Same market gave us good profits over last two months. We did not complain then, we should not complain now.

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

Sandeep Kharat July 10, 2018 at 11:27 am

Need not worry put holders.Nifty now is at its peak and very less to no chances it will move up. Even if it moves then tomorrow will be Doji candle(+/- 0.5%) movement and long term(may be year at least) trend reversal will begin. Range may continue till coming Monday (maximum). But in this time individual scripts will have variable behavior so options price will further decay.
Trend reversal is for sure!

Sandeep Kharat July 10, 2018 at 12:12 pm

Rarely(very very rare) if Nifty breaks or close above 10930 then it will stop @11140 only. If it has to go there then only in a day or two days time will be taken.
Still I am preparing entry in Nifty Puts partly or with complete fund after 3pm tomorrow.

admin July 10, 2018 at 4:30 pm

Well, close above 10930 has happened. Let us see what happens from now on.
Cheers
Reply

Amit July 10, 2018 at 4:10 pm

I can buy tata motor call /290 can I hold till expriry

Madan Mohan July 10, 2018 at 8:27 pm

Dear Amit, As per my understanding big brothers (DIIs & Institution Investors) are not interested in this scrip at this point in time. If it goes up by chance, it is mainly due to short covering or distribution. I will not buy a call here unless it is for hedging. Financially, It is one of the bad performers from TATA group. I prefer TCS to buy. Thanks and Best Regards.
Reply

Madan Mohan July 10, 2018 at 4:16 pm

Being stubborn is not a good sign when the winds are against you. One needs to adapt himself to changes quickly. 50% of out puts trades are still worth. But it is the time to pick up call trades too.
Wipro- One can look into Wipro, what was the price trending of Wipro a year ago, will the trend of July 2017 be repeated now? I feel so. this is the time for Wipro to announce a buyback.
M&M – it is laggard stock for a long time. In the last three months it is showing some uptrend symptoms, if the market goes up, it definitely will give another 100 points. – it is only opinion, not recommendation.
Century Textiles – showing uptrend for the past three days. risky but share can go up due to its demerger of cement division to Ultra Tech. for every 8 shares of Century each shareholder will get one share of Ultratech. but a risky trade.

admin July 10, 2018 at 7:15 pm

Thanks for sharing your thoughts. I am writing here to encourage the kind of thought process you have come up with. Trades can go right or wrong. For me or for any trader, profits are important but it is not necessary that profit is to come from every trade and every month.
Cheers.
Reply

Madan Mohan July 10, 2018 at 4:27 pm

Some thing is happening in ICICI Bank. Delivery percentage is increasing without increasing in price. What could be the reason?

Symbol Date Traded Qty Deliverable Qty % Dly Qt to Traded Qty
ICICIBANK 03-Jul-18 14020388 6468577 46.14
ICICIBANK 04-Jul-18 8233522 2792255 33.91
ICICIBANK 05-Jul-18 7505990 2627163 35
ICICIBANK 06-Jul-18 26025797 17892947 68.75
ICICIBANK 09-Jul-18 18374471 11879082 64.65

Nitesh July 10, 2018 at 5:13 pm

So, Nifty has really managed to stay above 10930 today. The million dollar question is that “Will it hit 11000+ from here or we can see a reversal” Any comments?

admin July 10, 2018 at 7:11 pm

When Nifty had hit 11000 last time, the yearly gain in Nifty was 29%.
I had asked a group of 53 persons whether anyone got that kind of return in one year. No one did. All were just watching NIFTY making new highs every month without making any profits from that.
Nifty high or low does not mean a thing if we just watch it.
Cheers.
Reply

Rohit Shourya July 10, 2018 at 7:04 pm

Madan, where do you get this data from in the NSE site? Delivery Qty% to Traded Qty.

Madan Mohan July 10, 2018 at 8:10 pm

Rohit, Link is below

https://www.nseindia.com/products/content/equities/equities/eq_security.htm
Reply

Ravi Kumar July 20, 2018 at 7:58 pm

Sir,
With all the PUT trades, could we have gone for a Nifty CALL option ?

admin July 20, 2018 at 11:27 pm

What would have been the purpose of that CALL option ?

It would have given money but a PUT buyer does not expect market to move up. We have been fortunate that our PUT options have done well even while NIFTY is going up.

Cheers.
Reply

Sandeep Kharat July 10, 2018 at 11:27 am

Need not worry put holders.Nifty now is at its peak and very less to no chances it will move up. Even if it moves then tomorrow will be Doji candle(+/- 0.5%) movement and long term(may be year at least) trend reversal will begin. Range may continue till coming Monday (maximum). But in this time individual scripts will have variable behavior so options price will further decay.
Trend reversal is for sure!
Sandeep Kharat July 10, 2018 at 12:12 pm

Rarely(very very rare) if Nifty breaks or close above 10930 then it will stop @11140 only. If it has to go there then only in a day or two days time will be taken.
Still I am preparing entry in Nifty Puts partly or with complete fund after 3pm tomorrow.
- admin July 10, 2018 at 4:30 pm
  
  Well, close above 10930 has happened. Let us see what happens from now on.
  Cheers
Amit July 10, 2018 at 4:10 pm

I can buy tata motor call /290 can I hold till expriry
- Madan Mohan July 10, 2018 at 8:27 pm
  
  Dear Amit, As per my understanding big brothers (DIIs & Institution Investors) are not interested in this scrip at this point in time. If it goes up by chance, it is mainly due to short covering or distribution. I will not buy a call here unless it is for hedging. Financially, It is one of the bad performers from TATA group. I prefer TCS to buy. Thanks and Best Regards.
Madan Mohan July 10, 2018 at 4:16 pm

Being stubborn is not a good sign when the winds are against you. One needs to adapt himself to changes quickly. 50% of out puts trades are still worth. But it is the time to pick up call trades too.
Wipro- One can look into Wipro, what was the price trending of Wipro a year ago, will the trend of July 2017 be repeated now? I feel so. this is the time for Wipro to announce a buyback.
M&M – it is laggard stock for a long time. In the last three months it is showing some uptrend symptoms, if the market goes up, it definitely will give another 100 points. – it is only opinion, not recommendation.
Century Textiles – showing uptrend for the past three days. risky but share can go up due to its demerger of cement division to Ultra Tech. for every 8 shares of Century each shareholder will get one share of Ultratech. but a risky trade.
- admin July 10, 2018 at 7:15 pm
  
  Thanks for sharing your thoughts. I am writing here to encourage the kind of thought process you have come up with. Trades can go right or wrong. For me or for any trader, profits are important but it is not necessary that profit is to come from every trade and every month.
  Cheers.
Madan Mohan July 10, 2018 at 4:27 pm

Some thing is happening in ICICI Bank. Delivery percentage is increasing without increasing in price. What could be the reason?

Symbol Date Traded Qty Deliverable Qty % Dly Qt to Traded Qty
ICICIBANK 03-Jul-18 14020388 6468577 46.14
ICICIBANK 04-Jul-18 8233522 2792255 33.91
ICICIBANK 05-Jul-18 7505990 2627163 35
ICICIBANK 06-Jul-18 26025797 17892947 68.75
ICICIBANK 09-Jul-18 18374471 11879082 64.65
Nitesh July 10, 2018 at 5:13 pm

So, Nifty has really managed to stay above 10930 today. The million dollar question is that “Will it hit 11000+ from here or we can see a reversal” Any comments?
- admin July 10, 2018 at 7:11 pm
  
  When Nifty had hit 11000 last time, the yearly gain in Nifty was 29%.
  I had asked a group of 53 persons whether anyone got that kind of return in one year. No one did. All were just watching NIFTY making new highs every month without making any profits from that.
  Nifty high or low does not mean a thing if we just watch it.
  Cheers.
Rohit Shourya July 10, 2018 at 7:04 pm

Madan, where do you get this data from in the NSE site? Delivery Qty% to Traded Qty.
- Madan Mohan July 10, 2018 at 8:10 pm
  
  Rohit, Link is below
  
  https://www.nseindia.com/products/content/equities/equities/eq_security.htm
Ravi Kumar July 20, 2018 at 7:58 pm

Sir,
With all the PUT trades, could we have gone for a Nifty CALL option ?
- admin July 20, 2018 at 11:27 pm
  
  What would have been the purpose of that CALL option ?
  
  It would have given money but a PUT buyer does not expect market to move up. We have been fortunate that our PUT options have done well even while NIFTY is going up.
  
  Cheers.

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July 2018— Options Once Again — Day 08