Friday, September 21.
Back after the holiday on Thursday.
Markets have been down over last three days. We are probably looking at some reversal of the trend today. Not good for us but we have to respect the markets.
Some of our stocks may continue with their own trend and that is where we have to look for profits.
Let us see how far our stocks are from their 52 week lows.
|Stock||52 wk Low ( Rs.)||LTP on Sep 19 (Rs. )||%age away from low||Date of 52 wk Low|
We see that almost all the stocks are within 3-9% of the lowest price in the 52 week period. All these lows are at the most 2 month old and stocks are inching back to these levels once again. Even if 3 out of the 6 stocks move below these levels, we are in for good profit.
We have to be vigilant about the trade moving away from us in case of trend reversal for a day or two.
As suggested in the post yesterday, let us be specially watchful in RELCAPITAL and L&TFH as these options are nicely In The Money and we have to protect the profits by exiting the trade and moving to lower strikes. The readers with more daring may chose to stay in the trades. The all or nothing attitude gives either a windfall profit or just nothing. It is better to be cautious.
There is a report about the merger of OBC and Andhra Bank with PNB. Like it happened with BOB, it may lead to fall in the prices of PNB stock. It may not happen as well.
But the risk is not too big. It traded at Rs. 79.25 on Wednesday. We go for PUT 75 for a premium of Rs. 0.50. ( If possible) Risk is only Rs. 2750 for 1 Lot. If price moves to previous 52 week low, we may get a profit of Rs. 3.00. Or we just lose out on our Rs. 0.50 premium.
This one has been losing steam for a long while. Made a 52 week low at Rs. 649.10 on Wednesday and recovered to Rs. 656.30 by close.
We know that 52 week lows are made for a reason and those reasons do not change in a hurry. If the stock goes down by just 4-5% in next 5 trading days, we are looking at Rs. 623-625 level.
PUT 640 could be got for Rs. 6.00 to Rs. 6.50. If the stock opens higher, Rs. 5.00 would also be feasible.
The reward to risk ratio looks good. Let us see how it works out.
Let this be true over next few days. Stocks at low may move a little lower and in a timely manner. We need this to overcome the memories of last month.
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.