We are on the half way mark today with regard to the number of trading days in this month. So far we have not even caught a whiff of profits. Every trade had gone wrong as soon as it was taken. Markets can be like that at times. It is at such times that keeping your belief is important.
Yesterday was again volatile but in a very narrow range. And finally ended up with a gain of around 40 points.
But surprisingly, NIFTY had 20 gainers and 30 losers for the day. That gives some indication that the up move may now be capped for a while.
We talked about YESBANK not doing anything in spite of NIFTY moving up everyday. Yesterday, this stock woke up and made a smart up move. At one stage it touched Rs. 247.60 before closing at Rs. 244.25.
We need a continuation of the trend and need it now.
Few days back we had entered a trade in BIOCON PUT 580. Like all other trades that had gone wrong from the same day. Yesterday, it bucked the overall market trend and moved lower by 2.93%.
The move reduced the loss in this option.
Other trades stayed more or less in the same position.
Thanks to the movement in these two stocks, the loss was reduced by about Rs. 9000 as compared to previous day. That gives us some breathing space and a little comfort.
Today SGX NIFTY is indicating a flat start to the market. Let us hope that our stocks specially YESBANK, BIOCON and DRREDDY continue in the way they did yesterday.
New Trade for the Day :
In the current up move, IT sector is not participating. Stocks like INFY, TCS, HCLTECH have actually lost ground over the 30 day period.
Among these stocks, INFY has exhibited more weakness than the others. It is weak over last 7 day period as well. We look for a continuation of the trend and go for INFY PUT 680 @ Rs. 4.50-4.80 based on the closing price for this option yesterday.
Lot Size is 1200, maximum risk is capped at Rs. 5760.
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.
arnab March 14, 2019 at 8:06 am
I think buying put calls in this bull market is not good, when the big ship nifty moves, all the boats are sweeped along with it. Nifty might have just taken a breatger before resuming upwards.Reply
vishal agarwal March 14, 2019 at 10:41 am
This is our assumption that all boats sweep along. The fact is quite opposite. There are n no. of examples. Look at any of the equity MF portfolios that you like and you will notice how they have performed over past 1 year. Nifty is up may be 10% while MFs are at best flat.Reply
admin March 14, 2019 at 6:58 pm
The fact is that market does not move as one homogeneous mass. If we look at NIFTY, it has gained 8.79 % over the 365 day period. A good gain on the back of recent up move after languishing for last few months. But another fact which we overlook is that in the same 365 day period, 30 out of 50 NIFTY stocks are losers. That is the real story. Strength is confined to few stocks and weakness prevails in most of the places.
If we take all the 197 stocks in which Futures and Options are traded, 134 are losers over the 365 period.
What does it tell us?
The strength is not real. I may prove to be wrong but numbers do not lie.
Azar Shaikh March 14, 2019 at 8:36 am
Sir INFY 680 IV is low.Reply
admin March 14, 2019 at 9:06 am
I agree. Exception is made in view of the sustained down trend. This is also the reason for selecting a strike just 3.5% away.
Raveendran K A March 14, 2019 at 8:42 am
There is more downside in Biocon once it breaks support at 610-605. Let’s hope fro the best.Reply
vishal agarwal March 14, 2019 at 12:05 pm
Auto sector report:Reply
vishal agarwal March 14, 2019 at 1:11 pm
Infy PE 680 taken at 4.2Reply
vishal agarwal March 14, 2019 at 3:36 pm
Sir the RelCapital 180PE trade worked well today. I exited it at 19.1 bought at 6.9 and entered 150 pe at 6.65. Thanks for teaching us such simple but practical way of trading options. Profit and loss left to the market.Reply
admin March 14, 2019 at 6:48 pm
Congratulations on a good trade.
Scaler March 14, 2019 at 7:30 pm
If yearly return is in negative even then one have to pay taxes?Reply
Anand March 15, 2019 at 7:47 am
No, but you need to show the loses so that you can offset that in next year’s profit.Reply