It is back to work after a holiday.
It appears that we are in for an up move. Asian Markets closed higher yesterday and then US markets did their thing. Another significant point is that Crude Oil price went down in a big way. Two of our PUTS are dependent on Crude Price. Both HINDPETRO and JETAIRWAYS may see an upside today. Rupee gain against the dollar if any will also weigh against us.
The fall in price is more than 3%. This is likely to cause major damage to our positions in Jet Airways and Hindustan Petroleum PUT Options.
Like I wrote yesterday, we may see a gain of about 80-100 points in NIFTY.
The result is not likely to be good for us.
It was alright on Wednesday. We had NIFTY going up 82 points and 5 out of 6 stocks in the red. We may not enjoy the same luck today.
The trend is weak in TATAMOTORS and ZEEL. They may go up for a day with NIFTY trend and resume their downward journey a few days later. I would stay in these trades but most likely take an exit from PUTS in HINDPETRO and JETAIRWAYS for the present even with a small profit.
Normally I would not do that but these trades were taken based on the trend of oil prices and when that trend reverses we do not have a better alternative than getting out. Suffering a loss previous month also calls for some caution.
All this news coupled with the weekend is likely to push down our PUT prices.
What is to be done ?:
What is a good fight ?
One that is avoided.
We can not fight the market when it goes against us. No one wins against the market. We avoid the fight.
There are always new trades to look for. We shall be doing that and closing positions in the two oil related stocks. We stay in the other trades and expect a reversal from Monday. Out of 18 trading days this month, 9 are already gone. Next 9 days have to give us the positive results.
New Trade :
We were positive about L&TFH last month. Just about exited the trade profitably in CALL 190 last month.
In the current month this stock is a big loser. It is down 10.8% over the 30 day period. Had gone down to Rs. 151.75 during trades on September 12 but recovered with the market to close at Rs. 155.85.
The 52 week low is still 10% away but let us not look that far. A decline of about 7-8% can take the stock below Rs. 145 and that suits us fine.
PUT 150 was traded at Rs. 2.45 on Wednesday close. The low of the day was Rs. 2.05.
With NIFTY likely to be strong, L&TFH may also see some up move and it may be possible to get PUT 150 for near Rs. 2.00 level.
We need not jump into the trade. The stock price movement and NIFTY movement both are to be watched and take the trade when it appears that trend is likely to change in our favor.
Maximum risk is Rs. 9000 lot size being 4500.
Be cautious, be fearful when things go wrong and trade rightly.
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.