As I am writing this, US markets (DJIA and S&P500) are around 0.7 to 0.8 percent down. Any drastic changes in this scenario by closing time... changes the trades below. As for tomorrow and the week I expect the market to have negative bias with many key events like Europe Meetings, Italy Vote and US Consumer Data coming in at crucial times.
Markets are already touching the upper trend line as can be seen above and the chances of a breakout from this trend line tomorrow are very rare. So in a negative downtrend what you do is simple... you buy a Put Option. As per Friday's closing prices a NIFTY Put Option with expiry of 24 Nov with Strike of 5300 (In the Money) is approximately 95 Rs and Strike 5200 (Out of Money) is roughly 59 Rs.
You can decide to buy any of this Strike. Stop loss should be at the trend line which is roughly 5360 and you can book your profits at first target (Support) of 5200 (it is possible in intra-day also). If your risk appetite is high you can continue to hold the position and take a call depending on how Europe Markets move in the afternoon.
If you decide to hold the position overnight, do not forget to create a hedge by buying a Call Option at the same Strike (Straddle) or a Strike which is Out of Money and Premium is less (Strangle). This is advisable even if you think that the risk is minimum and you can live without a hedge... it gives you peace of mind and that is something Master Card cannot buy. It is priceless.
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