Option trading strategies that i hope will work.

[detrich]

sold nifty 3600 puts at 159

A very wise descision. Because due to premium in futures and low PCR. the bottom is not far away. Seeing yesterday's sharp fall I feel that I would not take any fresh position in Nifty till there is a dead cat bounce. Because it is going to volatile and very messy. So no new positions in Index. Individuals yes. Following are the crucial support levels for Individual stocks:-
1)ACC-580 CMP-601
2)Cairn-154(Though I am tempted go on short here). CMP-175.05
3)SBI-1403
4)Axis Bank-663

The stock that has technicaly continued to fox me is allahabad bank. I just have not been able to predict but with one month still to go it being my fav stock I am sure I will pick up some clue here and there. People would just love to hear your feedbacks,strategies, positions. Keep me posted. Dear Rajat Exit shorts. I am also exiting today. No matter where the nifty opens. I am exiting it.

 

[detrich]

dear people,

for some of you who witnessed today's dow carnage and were left bewildered abt the causes. That despite the positive FED announcement the market fell.The reason is nothing but panic in market due to the problems in finance market not by anything that could directly affect us. The problem is more or less local than anything else. As I had said earlier that Monday would be an acid test for bears. Which it won hands down. It shows that the whole confidence of market has been shaken by the illiquidity. But what we saw today was a hallmark of an independent market which is in it's own phase. So anybody going after shorts just because of dow better think twice. Because this FED move in the long process a ground breaking step by goverment of USA for the Enterpretuer friendly step. Which will pay dividend in the long run. So please beware of taking any step based just on today's dow's movement.

 

[detrich]

dear people,

for some of you who witnessed today's dow carnage and were left bewildered abt the causes. That despite the positive FED announcement the market fell.The reason is nothing but panic in market due to the problems in finance market not by anything that could directly affect us. The problem is more or less local than anything else. As I had said earlier that Monday would be an acid test for bears. Which it won hands down. It shows that the whole confidence of market has been shaken by the illiquidity. But what we saw today was a hallmark of an independent market which is in it's own phase. So anybody going after shorts just because of dow better think twice. Because this FED move in the long process a ground breaking step by goverment of USA for the Enterpretuer friendly step. Which will pay dividend in the long run. So please beware of taking any step based just on today's dow's movement.

With the way asian markets are going it does not look good for me. But still I think bottom is near and would be formed at 3540-3500 levels at nifty for the short term. Next reasonable support is at 3250. But I am expecting 3540 to stand.

 

[detrich]

This is a candelstick chart of gold in indian rupee. The timeframe of this graph is half-hourly hour. Dated 4th July 2008 at 16:00hrs. The security has been quiet after a volatile session yesterday. After a sharp fall on late 3rd July Gold prices seemed to have formed a trading pattern between 13100 and 13000. But to me it looks like it is a brief pause in the uptrend that this security has been in from 1st July as visible from the chart. The uptrend has support at 13020 currently. So the primary trend here is an uptrend. The current pattern is rectangle trading range( a sideways movement). I have drawn two circles around what I think are major patterns in the chart. The first one occurs between mid-session of the 1st July and the early 2nd July. It is a rounding top which takes place after a security reaches at a level when traders feel that security has reached at the topside has been reached and start selling in panic at that time the price of the said security starts to decline. Same thing happened here. After the panic the security reaches a support level(a price where significant trend changes have taken place it serves a pshycological reference point). Usually from here after a rounding top. Security form a rectangle trading pattern. Like in current chart the prices of gold tumbled from 13220 to depths of 13000-12900(12970 here to be precise). From there it went into a slight bullish pattern on late 2nd July session. On 3rd July early in the day fresh buying started and from there the prices of gold started moving sharply upwards. And finally at 13300-13250 region it found staunch resistance. At this level the security falls slighly to it’s previous support mark at 13000-13025. From there again it tries to break the 13300-13250 region. Here the secon pattern was formed which could easily be classified as a double top. It is a formation which takes place when after touching it’s peak the traders start profit-booking and drive the price downwards and after reaching to the nearest support point a renewed buying intrest takes place. But after reaching th top roughly near the same high the traders who were not able to book profit start selling in panic. This creates a panic and usually this is mostly news driven panic. The price starts falling sharply. This exactly happens in this security in the early to mid session on the 3rd July. After reaching the previous top the panic sets in and in a panic driven move the price sharply fall from 13250-13300 to 13000 in a single tic. After this sharp falling. The prices find support at their previous support level of 13020-13050. After this fall it is confirmed that the 13020-13050 is a strong support level for intra-day trading. After this fall the current phace begins which as I had earlier mentioned is a rectangle trading pattern which usually takes places after such sharp fluctuations. It is a phase where sellers have exited the market and buyers are tentatively buying in the hope of bargain. This I hope explains current charts pattern and phsycology driving this patterns.




Trends and chart patterns give you sense of direction. But to maximise profit you need to time the market. Here indicators come in handy. There are many kind of technical indicators. But most popular are MACD and CCI. MACD(is an oscilator) is used to generate buy and sell signal and CCI(it is specifically used for commodities and it is also an oscillator) is a priced based indicator which is used to generate oversold and oversold signals. In this chart the usefulness of this indicator is perfectly summarised. At point C when during the peak(in the price of gold) there was negative crossover in the MACD a sell signal was generated here.This was further confirmed by CCI which was near +100 at that time just confirmed the sell signal. It provided excellent timing for exit and taking of short position. At point B there is a positive crossover occurs which provides ideal timing for the entry though the CCI is in overbought mode here the fact that there was major price flactuation before the signal that was compensated by the fact that the rise did not immediately take place as it did at point C. At point A another negative crossover takes place. At this time the CCI is more or less neutral and it is near oversold mark. Which is the reason why the fall was not immediate and a small upward move was made. But after that a sharp fall followed. This chart perfectly essays the importance of chart pattern, trends and indicators. This all combined togather could give huge benefit to the chart reader.
I hope somebody will find this helpful. Do give me you feedback and yes all the queries regarding this chart or others will be definately answered. Next time I will try to get a chart from live market.

 

[detrich]

IOC CMP-368
SL-375
Target-348 Incase somebody needed a clue.

 

[detrich]

I am starting a new advisory firm. That is if I find enough members. So I want know if anybody is intrested. I sure will be glad to hear about it.

 

[terminator_123]

Hi detrich,

Good to hear that you are starting your own firm
I was closely following this thread and very impressed with your market analysis in previous posts.

I'm very new to options (though theoretically sound) and recently entered into the following trade. It would be very helpful if you can give me some suggestions as to areas where I can improve since this is my first options trade.

Nov 5: nifty hovering around 3070 with negative bias
I just wanted to test waters so bought 1 lot of ca 3200 @120
by the end of day got one more lot @ 98

Nov 6: Unfortunately nifty was still going down
I got 1 lot of ca 3200 @70 with the idea of bringing down the break even point.
Bought one put of 2700 @120 for downside protection

Nov 7: Nifty was clawing back but facing quite a bit of selling pressure from metals
I got 2 lots of ca 3200 @80 to further bring the trading cost down.
Got one lot of nifty put 2700 @ 86 for further downside protection.

Now I'm holding 5 calls of 3200 @ 90
and 2 puts of 2700 @ 106

While I'm not sure if I'm going to profit or lose finally, I would love to have some inputs as to where I could have done better. I'm sure I could have done it more efficiently.

Other members, please post your suggestions as well.

(Sorry for the long post) Thanks a lot for your time.
...
termite

 

[detrich]

Hi detrich,

Good to hear that you are starting your own firm
I was closely following this thread and very impressed with your market analysis in previous posts.

I'm very new to options (though theoretically sound) and recently entered into the following trade. It would be very helpful if you can give me some suggestions as to areas where I can improve since this is my first options trade.

Nov 5: nifty hovering around 3070 with negative bias
I just wanted to test waters so bought 1 lot of ca 3200 @120
by the end of day got one more lot @ 98

Nov 6: Unfortunately nifty was still going down
I got 1 lot of ca 3200 @70 with the idea of bringing down the break even point.
Bought one put of 2700 @120 for downside protection

Nov 7: Nifty was clawing back but facing quite a bit of selling pressure from metals
I got 2 lots of ca 3200 @80 to further bring the trading cost down.
Got one lot of nifty put 2700 @ 86 for further downside protection.

Now I'm holding 5 calls of 3200 @ 90
and 2 puts of 2700 @ 106

While I'm not sure if I'm going to profit or lose finally, I would love to have some inputs as to where I could have done better. I'm sure I could have done it more efficiently.

Other members, please post your suggestions as well.

(Sorry for the long post) Thanks a lot for your time.
...
termite

Dear terminator_123,

Thanks a lot for your encouragement. My first advice to anyone who asks me about options is to remember options at end of the day is worthless so do not enter it unless you have something that indicates something concrete. It is never a good strategy to average down an option because of the time decay. That is why strangles always lose money at most of the time. What you did here was a little variation of swing trading in options. Now from all accounts I gather you have around 4 Call lots that i can calculate and 5 Call lots mentioned by you. What my suggestion will be is to exit the calls at 3050-3060 I may be wrong but believe me if I am right it will bring more pain. As for the puts they are something which I will be comfortable having and 2700 is something little fine. My advice will be to exit the CE(Fully whole lots) or partially if u wish and buy myself an deep ITM of say PE-3100. When the market opens. I expect you to be in green by end of the month. Good Luck! See you on Monday and yes thank you for the encouragement.

 

[terminator_123]

Thanks detrich.

I do a lot of cash market swing trading and yes old habits die hard

I'm thinking of exiting all calls as soon as I'm reasonably green
Thinking about the trade, I should have waited for the market to give me more clearer signals before buying those first two calls. Anyways no regrets as I'm just trying to learn

Keep posting info about any interesting trades you have entered into. They are great to learn from for newbie's like me

 

[coolboy007]

Hello Detrich ,

Nice to see you back on the forum , keep up the good work.
Byee