General Trading Chat

[amitrandive]

Please enlighten if someone has done this analysis.

NF had a resistance at 7465 (Fib as per my chart, or can be other as per yours), but NS didn't have any here (maybe at 7447-7450 level, but not 7443). NF couldn't clear and bounced back. Now, NF is supposed to follow NS and not the other way round. If NS is following NF, it means someone is taking advantage of NF resistance by selling NS components. What NS components are usually sold in this manner?

How about pure play of premium ?

 

[timepass]

Tatasteel is looking too happy despite bad results, wonder why.

 

[arsh22g]

How about pure play of premium ?

It shouldn't affect NS then. NF is the derivative with a premium, not NS. If NS is following NF, or someone is betting on the movement of NF through NS components, there must be some key scrips which operators are using to do this.

e.g. Play that we see on expiry is pure NS play, NF doesn't matter. Someone is trying to move away from their strikes, which are a function of NS and not NF, I assume there again some key scrips are used to cause this movement. It will be too dangerous for the operators to move stocks with very strong or very weak fundamentals, as value investors and algorithms monitoring these parameters may take away the operators' cake.

It's just a theory, reality maybe totally different.

 

[amitrandive]

It shouldn't affect NS then. NF is the derivative with a premium, not NS. If NS is following NF, or someone is betting on the movement of NF through NS components, there must be some key scrips which operators are using to do this.

e.g. Play that we see on expiry is pure NS play, NF doesn't matter. Someone is trying to move away from their strikes, which are a function of NS and not NF, I assume there again some key scrips are used to cause this movement.

This will help ,try not to go deep into the future price calculations.Just to get basics right.

http://zerodha.com/varsity/chapter/futures-pricing/

Future prices can be more or less than the spot price. This may seem like a premium or discount. These differences are due to carrying cost, borrowing cost, and future expectation.

The difference in price is attributable to the ‘Spot – Future Parity’. The spot future parity the difference between the spot and futures price that arises due to variables such as interest rates, dividends, time to expiry etc. In a very loose sense it is simply is a mathematical expression to equate the underlying price and its corresponding futures price.

 

[DSM]

Just my views on comments posted here :

* Analysis of index in real time is futile. We can only trade basis chart setups.

* Markets do their own thing - Good news gets sold into and bad news gets discounted. Traders with experience in the market will know Stock futures opening 5-6% (or more) gap down on bad news, can end up 5-6% (or more) and so to the index. 26th Oct. Nifty Gap up 8,723, Close at low of the day 8,257 So in real time, it is better to follow the charts and if analysis supports, that is fine, but else, can be discarded in favour of technicals.

* Volume data : Opening volume analysis does not count for much, unless seen in the context of previous 5D data in the same time frame. So if @ Volume on 5M chart is X qty, only if the volume is 2X, it may mean something. But what's to say, it's not one or two candles only? The volume based trades in short duration is easy to manipulate anyway and throw traders on the wrong track, before accumulation or reversal starts.

* Manipulation (as traders see it) - Will always be there. It is a fact of life. No point in complaining about it, and unless it is illegal, we have to live with it.

* Basically, my point is simple - Traders should trade with their own charts, methods, rules, system etc.... Focusing or trying to analyse what others may be doing in real time is of little help....

 

[amitrandive]

Just my views on comments posted here :

* Analysis of index in real time is futile. We can only trade basis chart setups.

* Markets do their own thing - Good news gets sold into and bad news gets discounted. Traders with experience in the market will know Stock futures opening 5-6% (or more) gap down on bad news, can end up 5-6% (or more) and so to the index. 26th Oct. Nifty Gap up 8,723, Close at low of the day 8,257 So in real time, it is better to follow the charts and if analysis supports, that is fine, but else, can be discarded in favour of technicals.

* Volume data : Opening volume analysis does not count for much, unless seen in the context of previous 5D data in the same time frame. So if @ Volume on 5M chart is X qty, only if the volume is 2X, it may mean something. But what's to say, it's not one or two candles only? The volume based trades in short duration is easy to manipulate anyway and throw traders on the wrong track, before accumulation or reversal starts.

* Manipulation (as traders see it) - Will always be there. It is a fact of life. No point in complaining about it, and unless it is illegal, we have to live with it.

* Basically, my point is simple - Traders should trade with their own charts, methods, rules, system etc.... Focusing or trying to analyse what others may be doing in real time is of little help....

:clapping::clapping::clapping::thumb:

 

[arsh22g]

This will help ,try not to go deep into the future price calculations.Just to get basics right.

http://zerodha.com/varsity/chapter/futures-pricing/

I know this (valued derivatives for a living), but my query was totally different. It was about why NS reacts to NF and not vice-versa. Anyway, I sense this might be wrong for this forum. :thumb:

 

[arsh22g]

In one instrument - yes. Not really intraday.

As for your other query about NS components; Just look at the top 10 market cap stocks. Should be a combination of few of those especially ones with a relatively higher beta.

Don't have access to BBG, can you please suggest some good screener where beta can be seen for different periods and frequencies?

 

[wisp]

I know this (valued derivatives for a living), but my query was totally different. It was about why NS reacts to NF and not vice-versa. Anyway, I sense this might be wrong for this forum. :thumb:

 

[DSM]

Arsh,

Just a simple analogy. E.g a newly constructed building has a value (Cost + labour) of X amount. Say this is the 'value' of the building, and is represented as same as 'Spot Nifty' Now the owner wants to sell it. Surely he will not want to sell at cost, but rather at a premium. But what price will the property attract? This will be based on the 'trend' If real estate prices are on the upswing, the owner will want a premium. And if the prices are on a down swing, the seller will want a discount. Consider the price the building gets transacted 'As Nifty futures' This price is a consensus price of the buyer and seller....

So to answer your question, futures prices take into account trend, expectations, volatility, demand-supply, greed and fear etc.... The same principal (in my view) determines Index or Stock futures trade.... and Nifty Spot follows these unquantified view of the market participants.....

Trust this helps....

I know this (valued derivatives for a living), but my query was totally different. It was about why NS reacts to NF and not vice-versa. Anyway, I sense this might be wrong for this forum. :thumb: