Weekends provide time to traders to look back as well as to look forward. We did the looking back part yesterday and found that our trades are doing well.
Now comes the looking ahead part.
On Friday, US Markets closed on a strong note.
Here is a snapshot of DJIA Index on Friday, May 04, 2018.
Will NIFTY do likewise tomorrow?
For last one month, we are not seeing any linkage with US Markets. Probably the Result Season is the reason for this disconnect.
But after 3 days of declines, there may be a positive move just based on randomness.
Coming to the results part, ICICIBANK results are to be announced tomorrow.
Experts are not expecting good numbers.
The projections are not good.
But funny thing about the stock market is that it does quite the reverse of what we expect. Based on the numbers projected in the above report, the stock should go down considerably. But I will not be surprised at all if it moves up for two three days and then corrects. Or I may be surprised if it really goes down as it should.
I am already in a position with PUT 270 in ICICIBANK and let us see what happens to this trade.
Crude Price :
Crude Oil prices were up on Friday by about 1.7%.
And do not look like coming down. Dollar is getting stronger against Rupee almost every day. This is not a good sign for Oil Marketing Companies and Airlines Stocks.
OMCs like HINDPETRO, BPCL and IOC have declined significantly over last month even when NIFTY was on the up move and may continue their downward journey. JETAIRWAYS and INDIGO have corrected very sharply over the last week.
HINDPETRO 290 PUT was our suggested trade and it still remains poised for a gain if the trend continues.
Both the above Airlines stocks are very volatile by nature and any trade in them could be very risky. All trades are risky but such stocks are very risky.
Trend For May Expiry :
We can try to assess and predict. People do it on daily basis and fail or succeed equally. There is no point in doing this exercise. On Friday there was a time when NIFTY was down 60 points but 3 out of 4 Stocks in which I had PUTS were higher than the previous day. A 60 point fall in NIFTY gave me nothing.
We have to look for STRENGTH or WEAKNESS in individual stocks.
When we are right we make money, otherwise we do not.
This is the simplest market truth and we shall do well in avoiding the complications.
Monday Trading Opportunity :
As already mentioned, the right thing would be to go for ICICIBANK 270 PUT.
At around Rs. 6.00 it is nicely priced.
On Friday, HCC ( Hindustan Construction Company ) made a 52 week low of Rs. 15.90 before recovering and ending the day at Rs. 18.35.
There is no signal better than a 52 week low or high to suggest Weakness or Strength.
PUT 17.50 is around Rs. 1.15 and the Lot Size is 15000.
Premium is very high but the IV ( Implied Volatility ) is in the range of 82-90 for HCC PUTS.
This kind of volatility can result into big losses if we get the price move wrong but bigger profits when we are right.
I would go for a less risky option.
Generally 52 week lows are taken down and new lows are made often within the same Expiry.
PUT 15 at Rs. 0.50 is quite okay.
It traded for Rs. 1.60 also on same day and may do again when the price moves down. And the loss is limited to Rs. 7500.
We look forward to Monday with hope and expectations.
Enjoy your Sunday.
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.
Satish Kumar May 6, 2018 at 3:49 pm
But funny thing about the stock market is that it does quite the reverse of what we expect. Really so true after HDFC Bank and RIL quarterly result. Its look like the time result come, maket is overbrought and than it start booking profits. I have notice from last 6 months, there are some stock which reach highest and than start falling. for example, Titan (not crossing 1000), Maruti (not crossing 10000), Indigo, Biocon, Tata Motors (380), L&TFH (not crossing 180), SAIL (not crossing 100), Infy (not crossing 1200). Look like Put and Call perfect balance.Reply
Especially media add more fuel for IT share Infy, TCS, Mindtree, HCL, NIIT and now it overbrought. It start falling.
Must say that everyday in a learning lesson !!
Madan Mohan May 6, 2018 at 3:54 pm
Dear Pramod, Assume that you are holding the following three long contracts for May Expiry. 1) Reliance 1020 CE @ 23 – (2) Reliance 980 CE @ 21 – (3) Reliance 960 PEC @ 21. What would be your approach in making money in these contracts. Would you wait patiently, till the Expiry date. Kindly comment. MadanReply