Market is showing downtrend before the events. Volumes are low, defensive stocks are going up. So market is all set to react to RBI policy and rate cut probabilities.
RBI announcement is expected tomorrow and FED announcement by tomorrow night, which would reflect in our markets on Friday morning.
Assuming 25 basis points rate cut is discounted and knowing past two market friendly announcements by Central bank Governor, it is more certain nothing earth shaking will happen tomorrow and one could see mere 40/50 points up move after the announcement. Main directional move will be on Friday.
In such scenarios problem for option traders is, generally premiums are very high and it becomes very unattractive for buying any contract.
This month so far has generated good profit.
Exit TATAMOTORS 410 CALL of January expiry, book profit.
Book profit in NIFTY 6400 CALL sell option of January expiry and December expiry.
Hold IDFC 100 PUT till Friday if you have generated enough profit this month.
If market goes up on Friday, banking will move up quickly and high beta banking stocks will show sharp upward momentum.
Buy IFCI 25 CALL between 0.10-0.15.
Generally one should buy ATM or ITM CALLs. But one can make an exception before any mega event, when IV is very high and could taste the water in small investment by buying OTM CALLs.
In this case, it is very small Rs. 800-1200 investment, it will pay off only if market changes direction after FOMC meeting on Friday otherwise one has to forgo this money. But it is worth investing this small amount and prepare for change in direction of market on Friday.
FED may not do anything and by not doing anything would give positive signals to market. Investors will dump money in EM markets and lot of fund would flow to India. If this happens very soon NIFTY will again touch all time high.
Disclaimer: This blog does not take any responsibility of your profit/loss
RBI announcement is expected tomorrow and FED announcement by tomorrow night, which would reflect in our markets on Friday morning.
Assuming 25 basis points rate cut is discounted and knowing past two market friendly announcements by Central bank Governor, it is more certain nothing earth shaking will happen tomorrow and one could see mere 40/50 points up move after the announcement. Main directional move will be on Friday.
In such scenarios problem for option traders is, generally premiums are very high and it becomes very unattractive for buying any contract.
This month so far has generated good profit.
Exit TATAMOTORS 410 CALL of January expiry, book profit.
Book profit in NIFTY 6400 CALL sell option of January expiry and December expiry.
Hold IDFC 100 PUT till Friday if you have generated enough profit this month.
If market goes up on Friday, banking will move up quickly and high beta banking stocks will show sharp upward momentum.
Buy IFCI 25 CALL between 0.10-0.15.
Generally one should buy ATM or ITM CALLs. But one can make an exception before any mega event, when IV is very high and could taste the water in small investment by buying OTM CALLs.
In this case, it is very small Rs. 800-1200 investment, it will pay off only if market changes direction after FOMC meeting on Friday otherwise one has to forgo this money. But it is worth investing this small amount and prepare for change in direction of market on Friday.
FED may not do anything and by not doing anything would give positive signals to market. Investors will dump money in EM markets and lot of fund would flow to India. If this happens very soon NIFTY will again touch all time high.
Disclaimer: This blog does not take any responsibility of your profit/loss
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