NIFTY Options Trading by RAJ

[healthraj]

I bought 6050ce at 85@100 ND 5500@35 nd m worried about d trend.... Juz watching market in 25 point up down range.... Waiting for d big move...

So that means already some 60% is gone due to the consolidation. And it might consolidate for another 2-3 days also till Friday. First of all why you have not the premium evenly. 85-35 does not seem. On the downside this pair will be profitable only below 5400 (which I do not think will happen in this series. you can may be expect 5650. Since you have put 85 at on Long side, You can keep the pair till Thursday and See what happens.

On the long side it should be profitable above 6100

 

[gurjant]

So that means already some 60% is gone due to the consolidation. And it might consolidate for another 2-3 days also till Friday. First of all why you have not the premium evenly. 85-35 does not seem. On the downside this pair will be profitable only below 5400 (which I do not think will happen in this series. you can may be expect 5650. Since you have put 85 at on Long side, You can keep the pair till Thursday and See what happens. On the long side it should be profitable above 6100

That's wt I am asking should I average my call at it current price of 33 .... Or juz wait tht market will come 6100.....these things majorly add experience in the beginning of trading....

 

[healthraj]

That's wt I am asking should I average my call at it current price of 33 .... Or juz wait tht market will come 6100.....these things majorly add experience in the beginning of trading....

Gujrant,

Your positions is already at a loss and so I don't know what to say. I am not sure if the market will touch 6100. But going by the MAX Pain theory I am sure the market will touch 5700 in this Series. So if you believe in MAX Pain theory, I would rather buy 5700 Puts and Average the Puts. Or Better wait for Thursday to Play the Puts. To balance your trade, Keep your existing positions and Buy 5700 PE.

 

[chintan786]

open interest is going down i nifty futures.

 

[Option.Trader]

Mate,

In case of pair,if one of the CE is loosing and PE is rising then how are we making money?Are not we still flat.

You will be if it market stays in range... the expectation is of a spike after the announcement, essentially a 250 point breakout, dunnow which way. Thats the reason we are buying a straddle only till Friday... if there is a breakout, one of the strike should more than compensate for the loss in other. It would be more beneficial to go naked, but we are unsure of the direction.So we are in a way hedging... but the big assumption is that markets may swing... for all you know, markets may already have factored in the news and then you are playing to the option writers hand, though probability is less due to lower volatility

 

[healthraj]

You will be if it market stays in range... the expectation is of a spike after the announcement, essentially a 250 point breakout, dunnow which way. Thats the reason we are buying a straddle only till Friday... if there is a breakout, one of the strike should more than compensate for the loss in other. It would be more beneficial to go naked, but we are unsure of the direction.So we are in a way hedging... but the big assumption is that markets may swing... for all you know, markets may already have factored in the news and then you are playing to the option writers hand, though probability is less due to lower volatility

Looking at the Volatility, it would be a breakout.

 

[Option.Trader]

3rd day in a row market ends at the same level.. 5850...anyone has idea if the FOMC declaration is on the first day (i.e today) or the end of second day on 18th?

 

[healthraj]

3rd day in a row market ends at the same level.. 5850...anyone has idea if the FOMC declaration is on the first day (i.e today) or the end of second day on 18th?

The Results will be known later night tomorrow. Indian markets will react only on 19th morning. So if any positions need to be taken it needs to be taken tomorrow EOD.

Tomorrow I would Sell around 5900-5950.

 

[healthraj]

Just a check on how the Preparation is going on for the Fed Tapering event...

So we said if the IV or VIX does not cool down in the coming days then that means the next week would be a non event.

So as on 12-SEP-13 2:00 PM
INDIAVIX @ 29.74
Average CE VOLT - 26.91 (come down from 28.68)
Average PE VOLT - 31.8 (Come down from 34.74)
NIFTY Historic VOLT - 37.98 (Come down from 39.08)

So that means there is a heavy consolidation going on and we should see a Breakout hopefully on the downside.

We will once again look at this on Friday and Monday. Hope the Fed Tapering is on Tuesday

Doing a Check on the VIX and VOLT for the FOMC Fed and RBI policy.

So as on 17-SEP-13 EOD
INDIAVIX @ 27.9 (In August the Range has been between 26 and 31) - Need to look out for a Breakout in this range for the breakout trade on Thursday / Friday
Average CE VOLT - 24.06 - Previous 26.91 (come down from 28.68)
Average PE VOLT - 33.85 - Previous 31.8 (Come down from 34.74)
NIFTY Historic VOLT - 34.11 - Previous 37.98 (Come down from 39.08)

One more day to go for the Fed Event. On Friday we have the RBI policy. The market has been consolidating in a nice fashion. Tomorrow afternoon we should see initial triggers in spike in VOLT and expect a breakout of the VIX range of 26 and 31 on Wednesday / Thursday / Friday.

 

[Option.Trader]

The Results will be known later night tomorrow. Indian markets will react only on 19th morning. So if any positions need to be taken it needs to be taken tomorrow EOD.

Tomorrow I would Sell around 5900-5950.

You mean short call?