Lot of positive sentiments driving investors and traders crazy. Stocks are available at multiple times of their book values and still people are buying.
Lottery trade JPASSOCIAT did not move at all.
This week I do not have an access to usual graphs and technical analysis which I would normally do before writing the blog.
However, it is very clear that rate cut is on cards. It has to happen sooner or later. China did it in-spite of problems in their economy to boost the growth.
It is also very clear that rate sensitives will be benefited by this move and traders will align their bets based on this assumption.
Keeping this thing in mind, here is the trade setup
Sell four lots of 8600 CALL of December expiration and Sell four lots of 8300 PUT of December expiration. Total inflow will be around Rs. 13000/- and delta will be negative.
To neutralize the delta buy YESBANK 700 CALL around 10-13 and Buy RANBAXY 600 PUT around 4-5 of November expiration.
Monitor trade such that maximum loss in all four trades should not be more than 7500/- (on EOD basis), which is about 5% of your total investment (about Rs.150,000) in these 4 trades.
As a thumb rule, in any strategy loss should not be more than 5% of total investment. Book profit in trade if total profit is above 10000-15000/- including costs.
Exit the trades on Thursday anyway, unless NIFTY is trading around same level as that of today.
In short, enter in to below 4 trades:
Sell 4 lots of 8600 NIFTY CALLs of December expiration.
Sell 4 lots of 8300 NIFTY PUTs of December expiration
Buy 1 lot of YESBANK 700 CALL of November expiration.
BUY 1 lot of RANBAXY 600 PUT of November expiration
Disclaimer: This blog does not take any responsibility of your profit/loss
Lottery trade JPASSOCIAT did not move at all.
This week I do not have an access to usual graphs and technical analysis which I would normally do before writing the blog.
However, it is very clear that rate cut is on cards. It has to happen sooner or later. China did it in-spite of problems in their economy to boost the growth.
It is also very clear that rate sensitives will be benefited by this move and traders will align their bets based on this assumption.
Keeping this thing in mind, here is the trade setup
Sell four lots of 8600 CALL of December expiration and Sell four lots of 8300 PUT of December expiration. Total inflow will be around Rs. 13000/- and delta will be negative.
To neutralize the delta buy YESBANK 700 CALL around 10-13 and Buy RANBAXY 600 PUT around 4-5 of November expiration.
Monitor trade such that maximum loss in all four trades should not be more than 7500/- (on EOD basis), which is about 5% of your total investment (about Rs.150,000) in these 4 trades.
As a thumb rule, in any strategy loss should not be more than 5% of total investment. Book profit in trade if total profit is above 10000-15000/- including costs.
Exit the trades on Thursday anyway, unless NIFTY is trading around same level as that of today.
In short, enter in to below 4 trades:
Sell 4 lots of 8600 NIFTY CALLs of December expiration.
Sell 4 lots of 8300 NIFTY PUTs of December expiration
Buy 1 lot of YESBANK 700 CALL of November expiration.
BUY 1 lot of RANBAXY 600 PUT of November expiration
Disclaimer: This blog does not take any responsibility of your profit/loss
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