Stocks To Keep A Close Eye On

[MurAtt]

My query is about unitech chart posted by izzner. Green candle is piercing the upper bollinger band, so why to short, i mean its a bullish sign isnt it? PLz explain.

Well done Man!
With prospering people all around, world seems a better place.

Btw, I have a question, the piercing of Upper BB can also result in breaking out of a stock from the range? Am I missing something here? Like piercing should result in candle closing above the upper band or wat?

Thanks.

Green candle piercing the upper BB does not give a short signal, rather it should be a B.Hold (not fresh buy too). If the next candle is green then a buy is trigerred, if it is red and comes back into the BB then it is a short.

Teacher ji, hope sahi jawaab diya hai (means I HAVE learnt something )

 

[arti]

Did i misunderstood savant's quote?PLz see the bold letters in the quote.

Hi Izzner,

Nobody Would Know That You Started Trading A Few Weeks Back...The Way You Are Going About It.....

UNITECH - What To Watch For....If It Pierces Again Above Todays HIGH Short It At Around The Highest Point...But Not Advisable To Carry Forward Short Position To Next Day....That Should Give You Decent Profit....Only If The Candle Close Is Red Then One Can Carry Forward The Position Safely To Next Day.

I Am Extremely Happy That You Have Adapted To Futures Trading... Like Someone Who Has Been Doing It For All Your Life....

Happy & Safer Trading

SavantGarde

 

[enygma]

SM is right on this one. Just a green candle piercing the upper BB does not give any signal. The colour of the next candle is what is important.

However, having said that there are always exceptions to the rule and other ways to play the same thing which is what Savant was mentioning to Izzner.

1. If a stock pierces the upper BB, there is usually a bit of down reaction the next day. So, if the price on Monday again comes above Friday's high, there is good risk/reward for going short intraday from the highest possible level.

2. Since we are looking at EOD charts, we will have to wait for Monday's closing to see what the colour of the bar would be. But do we have it? Depending upon the opening price, by the afternon we can "predict" to some extent whether Monday's candle would be green or red. So depending upon that, the short position can be carried forward.

3. Normally, the piercing of the upper BB might be coupled with breakout from previous congestion zone or breakout from previous highs, and hence that stock should be monitored for a long positional trade. Even in these scenarios, there will be a bit of retrenchment. Piercing of the upper BB is not a buy signal by itself for positional long trades. Longs should already have been initiated when a 5/6 crossover, price coming over 20 EMA or pricing moving over last pivot high etc happened.

Ofcourse, all this has to be seen with the overall market sentiment in view. When a general market weakness happens intraday, a stock that has pierced upper BB the previous day and is already up might fall more than others.

Hope this clarifies the confusion.

Regards,
Enygma.

Green candle piercing the upper BB does not give a short signal, rather it should be a B.Hold (not fresh buy too). If the next candle is green then a buy is trigerred, if it is red and comes back into the BB then it is a short.

Teacher ji, hope sahi jawaab diya hai (means I HAVE learnt something )

 

[izzner]

My query is about unitech chart posted by izzner. Green candle is piercing the upper bollinger band, so why to short, i mean its a bullish sign isnt it? PLz explain.

Dear Arti...(dont mind the word "dear" just tryin to flirt with you..:rofl

Unitech is a momentum/high Beta stock..Its primarily driven by news
99% of the time it amplifies the movement of Nifty...

The reason why I felt it should be shorted(strictly for Intraday) was simple
1)it pierced the Upper BB but closed below it so on monday it may open a few bucks up but will correct subsequently.
2) It has runup hard last 2 days..
3)Dow was in the RED so Nifty will open soft on monday after running up so much unless it rains 24/7 till sunday and met dept says we'll have 100% rains this year.


Will Look at asia before opening if its in a mess go short at opening else wait till 10:35...
make a profit of 1 or 2 bucks and get out...

From what I have learnt there are quite a few factors one needs to consider while trading..
At heart I am a hardcore bull I always go long..
but like savant sir has said " izzner has tasted Blood" so was adapting to the situation..:thumb:

 

[enygma]

Bunch of answers were pending upon 4700 Calls.

1. There was a reason for Savant to advice 4700 as the strike price. At the money or In the money call options gain faster during upwards movement of nifty. You would have observed that one point of gain in Nifty would make the 4700 call move more than the 4800 call and so on.

2. There is a time decay factor attached to the premiums we pay whenever we buy options. For e.g, the 4700 call closed at 174.10 and the nifty closed at 4732. (Am going by NSE last prices and not settlement prices, which might be a bit off but do not make too much difference for the math that follows). This means that 4700 call is now in the money since nifty is above 4700 (by 32 points). We are paying around 142 points (174-32) for the fact that there are still 18 trading sessions before expiry during which Nifty can go further up. This "time decay premium" will obviously come down as days pass and Nifty remains rangebound and this is what affects options buyers.

3. 4900 Call premiums will fall rapidly in case Nifty moves downwards towards 4500, since the probability of Nifty scaling 4900 becomes lesser as days go by.

4. You can sell options intraday or any day including on expiry. This is similar to selling a stock. The only thing to be careful is the fact that options expire on a specific date and hence there is a clock ticking. Do not get married to an option that is against the market trend because the premiums will fall off rapidly.

Having said all this, set the target as suggested by Savant next week and we can review the progress as the week unfolds. In case of a strong upmove, there might be a case to get into 4800 calls as well.

Regards,
Enygma.

Thanks to you, Sir.

Beginner's luck

yesterday I was very tentative and today just tried to do it. S2 of 4654 proved to be a tough nut to crack for bears and that gave me a signal to go for it. All in all, felt good.

Though, I have a question. As you said the possible target of 285 (thats a mouthwatering proposition it also means chances of getting 100-200 up on nifty. In that case wouldnt 4800 CE or 4900 CE, one can also think of? Just curious.

Regards,

 

[enygma]

Well izzner explained the "market situation" condition described in my post brilliantly. Bulls at heart and in a longer TF would still need to be bears in a shorter TF.

And about rains, as usual Cartoon Network is busying playing the monsoon theme song as soon as Nifty flirts with 4700.

Regards,
Enygma.

Dear Arti...(dont mind the word "dear" just tryin to flirt with you..:rofl

Unitech is a momentum/high Beta stock..Its primarily driven by news
99% of the time it amplifies the movement of Nifty...

The reason why I felt it should be shorted(strictly for Intraday) was simple
1)it pierced the Upper BB but closed below it so on monday it may open a few bucks up but will correct subsequently.
2) It has runup hard last 2 days..
3)Dow was in the RED so Nifty will open soft on monday after running up so much unless it rains 24/7 till sunday and met dept says we'll have 100% rains this year.


Will Look at asia before opening if its in a mess go short at opening else wait till 10:35...
make a profit of 1 or 2 bucks and get out...

From what I have learnt there are quite a few factors one needs to consider while trading..
At heart I am a hardcore bull I always go long..
but like savant sir has said " izzner has tasted Blood" so was adapting to the situation..:thumb:

 

[chachi]

Bunch of answers were pending upon 4700 Calls.

1. There was a reason for Savant to advice 4700 as the strike price. At the money or In the money options gain faster during upwards movement of nifty. You would have observed that one point of gain in Nifty would make the 4700 call move more than the 4800 call and so on.

2. There is a time decay factor attached to the premiums we pay whenever we buy options. For e.g, the 4700 call closed at 174.10 and the nifty closed at 4732. (Am going by NSE last prices and not settlement prices, which might be a bit off but do not make too much difference for the math that follows). This means that 4700 call is now in the money since nifty is above 4700 (by 32 points). We are paying around 142 points (174-32) for the fact that there are still 18 trading sessions before expiry during which Nifty can go further up. This "time decay premium" will obviously come down as days pass and Nifty remains rangebound and this is what affects options buyers.

3. 4900 Call premiums will fall rapidly in case Nifty moves downwards towards 4500, since the probability of Nifty scaling 4900 becomes lesser as days go by.

4. You can sell options intraday or any day including on expiry. This is similar to selling a stock. The only thing to be careful is the fact that options expire on a specific date and hence there is a clock ticking. Do not get married to an option that is against the market trend because the premiums will fall off rapidly.

Having said all this, set the target as suggested by Savant next week and we can review the progress as the week unfolds. In case of a strong upmove, there might be a case to get into 4800 calls as well.

Regards,
Enygma.

Dear Enygma,

This is simply superb explanation by you.

I had suffered a lot many a times, some time back as I tried deep Out of money calls/puts...........

As you described and as experienced by me, one should not try deep out of money options unless he gets the grip of playing options.

Though the risk is limited in Options, time decay will be the killer for the newbies who gets attracted to deep out of money Options because they are very less priced.

Newbies shall not jump into trading Options unless he do virtual trading of them for some time to gain experience.

Regards
Chachi

 

[arti]

Dimag ki batti jal gayi :!.Even Savant said dont carry forward it; just posted the query without analyzing the discussion.Anyways, thanks for explaining the logic behind ur trade.

Dear Arti...(dont mind the word "dear" just tryin to flirt with you..:rofl

Unitech is a momentum/high Beta stock..Its primarily driven by news
99% of the time it amplifies the movement of Nifty...

The reason why I felt it should be shorted(strictly for Intraday) was simple
1)it pierced the Upper BB but closed below it so on monday it may open a few bucks up but will correct subsequently.
2) It has runup hard last 2 days..
3)Dow was in the RED so Nifty will open soft on monday after running up so much unless it rains 24/7 till sunday and met dept says we'll have 100% rains this year.


Will Look at asia before opening if its in a mess go short at opening else wait till 10:35...
make a profit of 1 or 2 bucks and get out...

From what I have learnt there are quite a few factors one needs to consider while trading..
At heart I am a hardcore bull I always go long..
but like savant sir has said " izzner has tasted Blood" so was adapting to the situation..:thumb:

 

[arti]

Again a doubt related to first point. I know little about options and know the meaning of ITM,ATM and OTM. As per ur point 1, wont it be gud for a person to enter into option trade(call/put) with ITM or ATM.Example:-

Let say I cannt read charts or predict market/stock direction.Now suppose Nifty is above 4700 and the expiry date is month away, we can trade the call for 4700(ITM).Similarly if it comes below 4700, i can trade the put of 4700(ITM) and exit with the best opportunity available.

Bunch of answers were pending upon 4700 Calls.

1. There was a reason for Savant to advice 4700 as the strike price. At the money or In the money options gain faster during upwards movement of nifty. You would have observed that one point of gain in Nifty would make the 4700 call move more than the 4800 call and so on.

2. There is a time decay factor attached to the premiums we pay whenever we buy options. For e.g, the 4700 call closed at 174.10 and the nifty closed at 4732. (Am going by NSE last prices and not settlement prices, which might be a bit off but do not make too much difference for the math that follows). This means that 4700 call is now in the money since nifty is above 4700 (by 32 points). We are paying around 142 points (174-32) for the fact that there are still 18 trading sessions before expiry during which Nifty can go further up. This "time decay premium" will obviously come down as days pass and Nifty remains rangebound and this is what affects options buyers.

3. 4900 Call premiums will fall rapidly in case Nifty moves downwards towards 4500, since the probability of Nifty scaling 4900 becomes lesser as days go by.

4. You can sell options intraday or any day including on expiry. This is similar to selling a stock. The only thing to be careful is the fact that options expire on a specific date and hence there is a clock ticking. Do not get married to an option that is against the market trend because the premiums will fall off rapidly.

Having said all this, set the target as suggested by Savant next week and we can review the progress as the week unfolds. In case of a strong upmove, there might be a case to get into 4800 calls as well.

Regards,
Enygma.

 

[enygma]

The example for this would be something like this. (This will assume you have a general sense of market direction - atleast a very short term sense of market directon).

Lets say we feel that the current range of Nifty for the next one week is between 4600 and 4800. When the market dips towards 4600 and takes support (above 4600), buy the 4600 call which is just ITM or ATM. After a couple of days of upward movement, if the market shows some weakness and is unable to move further beyond 4750, buy the 4800 put which is ITM. On confirmation of the downtrend (break of 4725), sell the 4600 call (which would give you profit) and hold the 4800 put. When the market again takes support at some level and halts it downtrend, sell the 4800 put and repeat the process relooking at the new range you feel the market is in.

Points to note are that you are not holding the options for too long unless there is a continuous uptrend or downtrend. Also, you are trying to buy low and sell high so buying the calls near supports and selling at resistances. Vice versa for puts - buying at resistances and selling near supports. And during consolidation, you might actually be holding both the call and the put for a day or so or just do not be in a trade until the market determines its way forward.

Disclaimer :- All numbers mentioned above are fictional and any resemblance to any resistance or support - whether dead or alive - is purely coincidental.

Regards,
Enygma.

Again a doubt related to first point. I know little about options and know the meaning of ITM,ATM and OTM. As per ur point 1, wont it be gud for a person to enter into option trade(call/put) with ITM or ATM.Example:-

Let say I cannt read charts or predict market/stock direction.Now suppose Nifty is above 4700 and the expiry date is month away, we can trade the call for 4700(ITM).Similarly if it comes below 4700, i can trade the put of 4700(ITM) and exit with the best opportunity available.