What a day it was?
NIFTY at one point was down by 125 points. And then it decided to move up in the last 90 minutes of trade. Every stock which was being sold earlier was bought relentlessly. This kind of behavior pattern brings the hopes of option buyers to ground. What looked extremely beautiful moments ago, turns ugly by the end of the day.
This is one example of the kind of move I am talking about.
See the last part after 2 pm. Suddenly the stock becomes Buyer’s favorite.
Well, we look for similar move in our direction sometime. That will be the day we make money.
TATAMOTORS PUT 250 was the trade initiated yesterday at Rs. 4.00. It moved up to Rs. 6.00 and then reverted to Rs. 2.60 as the up move happened.
Another interesting fact:
HINDPETRO, JETAIRWAYS and BHARTIAIRTEL all ended lower than the previous day. Still the PUTS in the first two cases lost some premium. This is how the options behave at times. Give it whatever explanation you want to give like reduction in volatility etc. But the fact remains that money was lost in spite of being right about the market direction.
This shows that option greeks do not work rightly all the time. What happened to Delta of these PUTS ? I do not know and do not want to find out.
This was NIFTY at the end of day.
This is where we stand with our trades.
Not very good but not bad either. The test will come today as SGX NIFTY is suggesting a positive opening for the market. How our selections will behave is the moot point.
New Trade :
IBULHSGFIN is weak over 30 day period.
It continues to be weak over last 5 trading days as well.
In fact it had gone below Rs. 1180 level yesterday before recovering to Rs. 1222.
With same weakness, it should move below Rs. 1180 once again over next few days. I would look for PUT 1160 ( about 5% away ) at a premium of Rs. 12-13. With Lot Size as 500, maximum risk in the trade is Rs. 6000-6500.
I would like to thank the readers for expressing their good wishes on Teacher’s Day yesterday.
A teacher derives his happiness from the success of the pupils. I would like to wish that success ( here it means profitable trading ) for all my readers. That is the reward I seek from my endeavor of writing here.
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.
Ravi Kumar September 6, 2018 at 11:56 am
what’s your say on ZEEL. Was watching from couple of days for a PUT but didnt have heart. Today, Near OTM’s rose almost by 1500%.!!Reply
Jatin September 6, 2018 at 12:24 pm
Sir I’m happy today because the learning which we have got over the past couple of months is invaluable.The one difference that I notice between me and my circle of friends and colleagues who trade is that these guys follows tip on telegrams/other services whereas I just need to find strong and weak stocks and trade confidently.I sometimes feel blessed to have gotten to know you and mentored through quora and then through the workshop and optionsnext.Reply
Dinesh September 6, 2018 at 8:36 pm
How do we arrive at which premium to enter after selecting the stock and it’s entry price.
Basically wanted to know what is the right premium to enter any trade.