After the big positive move on Monday, we had a holiday on October 02.
Back to business on Wednesday morning and it looked that bears had never gone away. They had just taken a leave of absence and they came back strongly. NIFTY was finally down by about 150 points at the end of day.
Like it happens many time, a fall or rise in NIFTY does not do anything for our trades.
TATASTEEL PUT 540 was bought for Rs. 9.00. The stock went up higher but thankfully closed lower due to move in last one hour. This option ended up at Rs. 10.30.
IDEA PUT 37.5 could be bought for Rs. 2.00. The stock went down nicely and came very close to its recent 52 week low. At the end of day, the PUT traded for Rs. 3.00.
HINDPETRO did what it has been doing. Going lower initially and then moving up thereby eating away our premium. I will still stay with the trade as crude oil price is making new highs everyday. Today we may see a move in our direction. Or we may not, if Rupee regains some strength against the Dollar.
ZEEL just went through a routine day.
Here is the position:
We missed out on two good trades in BHARTIARTL and M&M which were among the very weak stocks yesterday. Hits and misses are part of a trader’s life. Let us move on.
New Trades :
Only certainty in present market is volatility. Get ready to experience wild swings.
Asia Markets have opened lower ( China is closed) and SGX NIFTY is trading lower by more than 100 points as I write.
To trade in such a market is not easy. If it opens down the dilemma is whether there would be a recovery or a continuous slide. One can be wrong either way.
We missed the bus ( or SUV ) with M&M trade.
Let us take a ride on another auto stock.
ASHOKLEY ( Ashok Leyland Ltd ) has been weak over one month period.
It is actually not giving a clear signal over last 5 trading days but in view of a likely NIFTY decline, I am willing to take a chance here.
Current Price for the stock is Rs. 119. PUT 110 was traded at Rs. 2.70 yesterday.
If it opens gap down, it may be a difficult trade. I would like to buy this option for Rs. 2.50-3.00.
Let us trust our present trades to do well.
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.
Wasim Akram October 4, 2018 at 8:58 am
what about JK Tyre sir,its looking weakReply
sandeep kumar maurya October 4, 2018 at 10:15 am
HINDPETRO moving in opposite direction to niftyReply
Narayanan October 4, 2018 at 10:34 am
Nifty almost 200 pts down and Sensex 650 pts down but still PUT Value is not increasing except for the initial opening volatility especially HPCL eventhough Crude prices are increasing day by day. Can anyone explain this?Reply
Ravi kumar October 4, 2018 at 11:00 am
Sir… BANK OF Baroda seems to fit the criteria ..what’s you view?Reply
Rajesh October 4, 2018 at 2:01 pm
Bulls are dead now. Only bears for now. Scary news everywhere.
Ravi kumar October 4, 2018 at 3:35 pm
Today’s hero: HINDPETROReply
Saket October 4, 2018 at 3:35 pm
What a day!! Exited HINDPETRO at 38.6 (bought at 6.8). Could have waited more. But though to book the profits. Would try to re-enter at lower strike tomorrow. Thanks Pramod-ji for such a nice technique of identifying the stocks!Reply
Tharik October 4, 2018 at 3:36 pm
Looks like our patience in Hindpetro in two series will pay off this time.. Yet to close my 240 PE today…Reply
Nilesh S October 4, 2018 at 3:36 pm
Patience in Hindpetro paid off nicely..Reply
Had taken 240 PE at 6.2, exited at 30
Also had taken 230 PE at 8.5, exited at 32
amit October 4, 2018 at 3:36 pm
i cant believe hpcl 40 +++Reply
Tharik October 4, 2018 at 3:56 pm
It is due to the Govt’s announcement to cut excise duty on petrol and OMCs will absorb Rs1 per litre.Reply
Hardik October 4, 2018 at 3:39 pm
Hi Pramod Sir,
Commenting on your post once again. I don’t know what to say. After months of trading in options finally I am able to see some good profit. It’s all because of HINDPETRO. Can you guide use what happened to it that it went 22% down.Reply
srinivas October 4, 2018 at 4:14 pm
What a badluck for me? Hindpetro 220 PUT 2 lots bought at 2.50 & sold 2.80. now it gone to 30 RupessReply
Chandra_Hyd October 4, 2018 at 4:18 pm
Exited HINDPETRO @ 42 (6), Thanks to Jaitley ji, he cut excise duty by 1.5/L on Diesel and Petrol(foolish)
Prince Nahata October 4, 2018 at 5:11 pm
Hindpetro recovered to 217 in last minute of trading from lows of 191.I booked it at 39. Thanks Pramod Sir feeling of despair due to inability to take IDEA put somewhat Vanished .Reply
admin October 4, 2018 at 5:54 pm
HindPetro did not recover in the last minute. The entire fall had happened in the last 15 minutes of trading. The closing price is worked out by taking the weighted average of price in the last 30 minutes of trading i.e. from 3.00 pm to 3.30 pm. That average price is Rs. 217.
there are lot of mistakes made due to this on expiry day if you are not aware of the facts. Any fall or gain happening in the last 15 minutes will generally not get reflected in the options or futures prices ( In the Money) on expiry day.
i hope it is clear now.Reply
Ravi kumar October 4, 2018 at 6:17 pm
That means , tomorrow the fall should reflect in the premiums ??Reply
admin October 4, 2018 at 6:35 pm
Premiums are already reflecting the fall. The last buy bid was 45.05. It can not be the bid for 217 price. It corresponds to the LTP of Rs. 194Reply
Tomorrow, if it opens at 194, it will be seen as 10.5% fall even when it would be starting from where it was today.
Ravi kumar October 4, 2018 at 6:50 pm
Understood. Isn’t it wrong then to average the last 30 min price? It misrepresents both the close price for the day and next day’s open price.
Saket October 4, 2018 at 7:10 pm
Pramod-ji, NSE’s website shows LTP as 40.05 and closing price as 18.95 for 240 PE. Does that mean that the closing price is adjusted with the closing stock-price of 217 ?
admin October 4, 2018 at 7:23 pm
Closing price is weighted average of the prices in the last 30 minutes of trading.
It has relevance for margin requirements etc for options writing.
Prince Nahata October 4, 2018 at 9:54 pm
Sir thanks for sharing this piece of information which many of us were unaware of.
Ravi kumar October 4, 2018 at 5:17 pm
Sir ..still holding HINDPETRO at rs. 40… should we wait or book profit? As it seems to be a knee jerk reaction to the news eventReply
Devendra October 4, 2018 at 9:00 pm
Dear Pramod ji,Reply
Greetings of the day & thanks for suggesting such value trades !
I have a query regarding HPCL put option strike price selection.
Today HPCL PE @240 and 220 moved in tendem with fall of the scrip but PE @235 didn’t move in that proportion. It’s today’s range was 5 ( low ) to 12.5 ( day high ).
What is the reason behind this ?
It will be really useful for selecting proper strike price.
Thanks in advance.
Ravi kumar October 4, 2018 at 9:18 pm
I believe it all depends on the volumes and in turn the IV at a given strike which dictates the premium/price discovery.. Promod Sir can validate furtherReply
Chirag October 5, 2018 at 8:53 am
I think as this strikes (235,225) were introduced this month by exchange it did not had enough participants(OI and volume)…due to less liquidity it was not showing pair pricing of option…..we can say IV was less hence premium was less(theoretically)…on the practical side I guess…new buyers were not bidding higher and existing writers might not ready to close out at higher price….It would be interesting to see how it behaves today.Reply
admin October 5, 2018 at 8:56 am
These were newly introduced strikes and professional option writers do not venture into these mid price strikes. The rates are never right because of extremely low volumes. Such strike price sees good volumes only near to expiry if it is near the ATM situation.Reply
Manas Kumar October 5, 2018 at 7:58 am
Pramod sir, your stock picking skill is worth millions.
What ever you are picking is turning into a gold mine.
Booked profit in hindpetro @ 36Reply
admin October 5, 2018 at 8:19 am
Let us be thankful to the market for favoring us once in a while.
My method remains same whether it is the loss making August or wonderfully profitable September.
Ravi kumar October 5, 2018 at 9:15 am
Sir..HINDPETRO 240 PE is today showing price of 18 ..yesterday at close it was 40 !! 🙁 not sure what happenedReply
Ravi kumar October 5, 2018 at 9:28 am
Sir, am in a pecular situation ! Hindpetro 240 PE is held it yesterday at close premium of Rs 40. Today as per Zerodha its worth Rs 18 only!.. Where as on NSE Option chain 240 PE has no Volumes, no IV.. no Price!!!!
where as 230 PUTs on NSE are trading at Rs 62!!
1. What is the way out? waiting till Price action picks up for 240 PE is one way
2. If Hindpetro stays low say, under Rs 200, by Expiry does 240 PE picks value?
Its a Mixed feeling!… Tough on profit, but the Notional loss is Hugeeee!
Looking for your replyReply