So Near yet so Far

Today 5300 PUT Option Premium reached 70.20 but yet did not go below 70. I had placed an order in the morning for 70 and then did not get time to check it again. Right now I am not sure whether I should be happy or sad. Given that the US Markets are closed for Independence Day holiday and closing price of 5300 PUT around 75-76 I think we may just about get my target entry tomorrow.

However, with every passing day the probability of a upward spike in NIFTY is waning. Similarly the time remaining for NIFTY to make down move is also reducing and so is our risk.

Have a look at the chart:

If you see the peak made sometimes in Nov 2010; from then it has been a free fall with lower highs and lower lows. This is first rule of finding trend. This continued till around Dec of last year when Market was about 4500 from where it took off to above 5000. Now here Market violated  the earlier High and it went above that. After that came correction but it did not go below earlier low in May-June of this year. From there we are again going up. This picture become a lot clear if you see the weekly chart.

Fibonacci levels for this move are also plotted. Fibonacci is one of my favorite topic and I could discuss that for hours. I am really clueless how I am gonna write about it during Tutorials but it will be very interesting I am sure.

Short term view, markets are stretched above all EMA levels as well as fundamentally not much has changed to warrant this rally (apart from new FM and few positive announcements). Few broker houses have given positive reviews for India equities in recent days but that is it. Nothing has changed fundamentally for World or for India barring probably the sentiment. All in all we should see some correction. Technically I am not able to come up with any indicator which is telling me that the fall is imminent. We are hardly in overbought condition. MACD is not giving any sell signal and even Fibonacci levels are not conclusive.

In such scenario, it is worth thinking that whether we should take one sided call and buy only PUT Option betting for the fall. I probably have to study S&P 500 Index of US more closely as that is the one which affects us more directly. Will have to do a lot deeper analysis but in the meantime will stick to earlier stated position and will buy PUT call if opportunity is there. Though I may reduce the entry point (risk) a bit given the information in this post. Let me know what you think. Happy Trading.

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Trade Post and Comments

Thanks guys for your comments. However I did not mean that you write 'thanks' comments. What I meant and expected is that you guys also contribute to the discussion. Not necessarily by some new information but by way of questions, critical comments. You can also write what do you think about the charts I post. You can also write if you have questions about some particular stock or index. Most importantly you can let me know how do you want this blog to shape up.

Idea is, I am not a professional blogger and I just pen down my thoughts in a haphazard manner. There is no order, no sequence and no one to look at the larger picture. You guys are the observers and you can guide me if something is not right. So write something on that line. I actually never thought, but this blog, if made properly, can be a good starting point for many people. This may not happen overnight or in few weeks but if I continue to write for whatever time I am spending now then may be in a few months or in a years time, this blog can be a good resource for many new starters. You guys can help me in it.

As for the trading post, then Markets did not go up for Euro Summit outcome as everyone believed. I also expected some sort of minor rally at least; before a correction of our liking happens. The time has not run out still. US markets are slightly up as of now and we may see some sort of spike in our market too before we get some retracing.

Today morning I tweeted about 5300 PUT being below 80 (it is updated on blog page automatically). I would have planned an entry around 70 level but sadly it did not come today. I believe we may still get that chance. If not and if you want to open a position quickly, 5200 PUT is also good option. Current level is about 50 and Risk for a lot would be limited to around 2500 Rs. Not bad.

Will write MA post and how to trade with them soon. Happy trading and keep commenting.

Attempted Trading Post

Hello friends, my apologies for not being able to make post 4 of Moving Averages. Been busy this entire weekend. However I am trying to at least keep the second post promise and though I have not got sufficient time to look at the charts in details, I am just posting what I think will unravel in the July series.

What a start we had for July series on Friday. Few would have expected (including me) that markets will cheer so much the announcements from new FM. As I had mentioned in last post that MMS (ManMohan Singh) had made all the right noises and even the clarity on few announcements by PranabDa will help. Also Euro Summit happened over the weekend and though I would have loved to make a detailed post on it's outcome the time is not on my side. In a nutshell, many people think (in Europe) that out of 20 odd Europe Summits so far since the problem started, only this summit probably not only met but also exceeded the expectations. Now, me thinks, the primary reason for this is the inherently low expectations that everyone had this time. Also though Angela Merkel was vocally against shared liability of Eurozone debt, she also understands that there are not many options left. Anyways what happened in Brussels is expected to prop up the markets at least in the short term so expect another rally tomorrow.

As for the trading; I believe that though we may see the rally in equities to continue, it may be short lived. If I have to trade, I would probably wait for the market to go up tomorrow and would like to bet on to a correction. This definitely carries a risk that market may continue to go up. It also carries the risk that the correction may not happen in time for July series.

The best way to cut risk is to buy a PUT Option at 5300 or 5400 Strike if you agree with my thinking. Right now 5300 Put Option is around 105 Rs and 5400 Put Option is around 160. I will probably wait for markets to gain tomorrow so that these prices drop and depending on the level of the markets and price of these two Option will do a quick break-even calculations and based on my risk appetite get in to one of them. Needless to say Options is a risky business and will not play it beyond my risk money.

Please note that this is not a investment or trading advice. It is only my personal thought process on what I would do if I trade tomorrow. I have been wrong more often than not and lost money. Please do not treat this as an advice and do not blame me for your decisions.

Finally, I would like to say that I am really really disappointed that no comments on my earlier post. Probably that is also one of the reason I could not write MA post 4. So this time do not let me down and let me know what you think of this post. Also its been long that I took any feedback from you guys so it would be great if you can let me know if you want any changes in the way this blog is shaping up. Will be waiting for your suggestions. Happy trading.

Disclosure: Been very busy so may not get time to trade at all. Right now I do not have any trading positions open.