Tuesday June 19, 2018.
NIFTY opened low and stayed low throughout the day. Ended near the low point of the day. Where does it go from here? Let us see over next few days.
Two of our PUT selections made new 52 week lows.
VEDL and UPL. Let us hope that they keep with the downtrend for few more days. BHEL also gave back the gains of yesterday and some more. I expect this stock to go below the previous low. Let us hope that I am right. We need to be right to get out of the situation we are in.
Here is the current status:
Better than the previous day but still not out of woods.
The problem is that when NIFTY goes down, our CALL options become losers.
And most of the PUT options have lost value due to time decay.
But that is the life of a option buyer. Making profit is not an easy game. It is never a straight and narrow path. There are numerous pitfalls on the way which have to be negotiated.
Had these been futures, the result would have been this:
I wish life could be so simple for option buyers.
I know even with my wishing it is not going to change. So let us stay in the trades and stay strong for one more day.
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.
Madan Mohan June 20, 2018 at 6:32 pm
BHEL price behaviour – On 28th and 29th of May, just 2 days before the May expiry date, the price rose from the low of 75.30 to high of 86.85. The price got increased by 10 points in just two sessions with huge volumes. This helped the share to stay at 83.65 on the May Expiry, which caused our Put CEs made worthless for May expiry. The question was whether this move indicating a trend reversal? or stock distribution took place? do not know. But BHEL did close in loses in the next three consecutive days. (indicating the above price increase as a false alarm ) Came down from 83.65 to 72.65.Reply
Figures crossed and waiting for two big sessions in coming days. Trying to read the behaviour of stocks.
admin June 20, 2018 at 11:17 pm
As we have seen there was no actual trend reversal. It was misfortune for the PUT buyers. They were to prove right few days after the expiry. Well the long term trend is pretty negative.
In August 2015, high on August 03 was Rs. 287.45. NIFTY was then at 8543.
Today we have NIFTY at 10772 and BHEL trades at Rs. 75. Considering the 2:1 split, the price can be equated to Rs. 112.50.
It has done a journey of losing around 60% value while NIFTY has moved up by 26%. In my view it is a perpetual short. Yes, it will jump suddenly by 5-6% in a day but ultimately the trend will prevail. One day we shall see it at around Rs. 30-40 levels.Reply
Madan Mohan June 20, 2018 at 6:46 pm
Dear Promod, UPL was a perfect and timely recommendation from you. We took the opportunity promptly without wasting time. Have one lot at 680 and another at 660. Today SBI did not participate in Bank Nifty Rally. Will it do the same in the coming days. Seen little bit price change in PNB and Airtel and moving towards our goals. By writing like this i am releasing some of my tensions and anxiety. Please keep helping us in improving our knowledge.Reply
Thanks for the support and comments.
admin June 20, 2018 at 11:07 pm
It is good to be your own sounding board. Like I said, trading is a lonely business and the traders need to talk. By posting comments here you are doing just that and you are very very welcome.Reply