How to trade on Monday ?

[Ganesh543]

Ganesh,

Don't Give Inane Reasons For Sellling, Cause If You Really Wanted To Protect Your Portfolio, You Could Have Calculated The Beta Of Your Portfolio & Could Have Protected Your Equity Against Downside By Buying PUTs

Happy & Safer Trading

SavantGarde

Dear Garde

I usually invest in AAA rating high beta stocks .......like HDFC Bank if it were fractured mandate I would have beared heavy loss on monday .....

How could I had buy puts as I could not predict mandate but I was negative on stable goverment (something we can guess only no technicals analysis ) that is my fate that we will see a stable goverment as per GODs wish ....

By the way how can we calculate beta of a stock and what value is safer to invest as per my knowledge beta of 1.8 0r 2 value is stock with high volatility


Thanks
Hare Krishna
Ganesh

 

[SavantGarde]

Ganesh,

Your Investment In 'AAA' Rated Stock, You Should Have Also Known The Fact If We Went Down On Monday, Would Have Been Only A Kneejerk Reaction, As It Had Happened On 17th May 2004, That Is The Time To BUY, My Friend.

If You Have Noticed In My Stocks Thread Everything Is Still On BuyHold, That Is Technical Analysis For You & My Nifty Thread Last Update For S/L Is 3709 Only To Be Placed If It Crosses 3709 By +26 Points & Have Given A Target Of 4178.00, Check The Dates Of The Posting Too.

You BUY PUTs Precisely For The Reason If You Don't Know What Would Happen On Monday.

Google For How To Calculate Beta Of Stocks You Will Get The Required Information.

SavantGarde

Dear Garde

I usually invest in AAA rating high beta stocks .......like HDFC Bank if it were fractured mandate I would have beared heavy loss on monday .....

How could I had buy puts as I could not predict mandate but I was negative on stable goverment (something we can guess only no technicals analysis ) that is my fate that we will see a stable goverment as per GODs wish ....

By the way how can we calculate beta of a stock and what value is safer to invest as per my knowledge beta of 1.8 0r 2 value is stock with high volatility


Thanks
Hare Krishna
Ganesh

 

[Mangafreakz]

http://stocks.about.com/od/evaluatingstocks/a/beta120904.htm

 

[sibumajumdar]

There is nothing much you can do on Monday to salvage this trade....In case of gap up opening...yr Futures position will loose and the profit in option position will not be sufficient to offset the loss because of delta and the time value of option going down ( I am not saying overall price of option will go down as intrinsic value will go up ) Your only chance of making profit is if the market at expiry is lower than (3685-270)

But your loss will also be not large.....only 85 points max. If you can square off this position in less than 85 points loss on Monday....do that.

You may sell a 3400 put and leave the position till expiry....that will reduce the loss to some extent...but it will also eliminate the profit potential.

Best Wishes,

Smart_trade

Dear ST,

Thanks for your initiative. Suppose Monday N op 100 pts up.... Loss for Minifty Fu 20*100=2000 & gain for may 3500 CA expected to be 50*50=2500on a/c of rise by 50 pts (275+50-270). Pl comment on this. Thanks.

SM

 

[Smart_trade]

Dear ST,

Thanks for your initiative. Suppose Monday N op 100 pts up.... Loss for Minifty Fu 20*100=2000 & gain for may 3500 CA expected to be 50*50=2500on a/c of rise by 50 pts (275+50-270). Pl comment on this. Thanks.

SM

oh...I thought you sold the entire qty in futures but only thing instead of selling the calls you sold the entire qty in mini nifty futures....but if you have sold only 1 mini nifty then you will make money....the gain in options will be more than 50 % of the rise in futures because the delta will be 0.7 or so as the option will be in the money.

You have not considered the effect of reduced time premium because of reduced volatility likely as the event is over....but on the whole you will make some money if you square off everything togather when the mkt settles down...

Monday I expect mkt to open around 300 points ( Nifty) up !!!

Best wishes,

Smart_trade

 

[sibumajumdar]

oh...I thought you sold the entire qty in futures but only thing instead of selling the calls you sold the entire qty in mini nifty futures....but if you have sold only 1 mini nifty then you will make money....the gain in options will be more than 50 % of the rise in futures because the delta will be 0.7 or so as the option will be in the money.

You have not considered the effect of reduced time premium because of reduced volatility likely as the event is over....but on the whole you will make some money if you square off everything togather when the mkt settles down...

Monday I expect mkt to open around 300 points ( Nifty) up !!!

Best wishes,

Smart_trade

Dear ST,

Suppose today op 300 pts up & trend is also up then I am thinking to apply Trailing SL=10-20% for may call upto 4100 (?). I am in confusion regarding JUNE MINIFTY 3500 short @ 3685. Pl guide me shall I sq off both at a go or let the Loss mount after CA sq off and hold it for sq off in June when N goes below 3685. will it be adviseable to take this risk? Do u sugggest to hedge with CA/PA/MAY MINIFTY. pl comment/suggest. BETA=0.70, means if N up 100 pts call prem up 100*0.07=70 pts (?). Thanks.

SM

SM

 

[Smart_trade]

Dear ST,

Suppose today op 300 pts up & trend is also up then I am thinking to apply Trailing SL=10-20% for may call upto 4100 (?). I am in confusion regarding JUNE MINIFTY 3500 short @ 3685. Pl guide me shall I sq off both at a go or let the Loss mount after CA sq off and hold it for sq off in June when N goes below 3685. will it be adviseable to take this risk? Do u sugggest to hedge with CA/PA/MAY MINIFTY. pl comment/suggest. BETA=0.70, means if N up 100 pts call prem up 100*0.07=70 pts (?). Thanks.

SM

SM

Dear SM,

Considering the fact that with stable UPA Govt,we will trade in higher orbit,I would suggest cutting the loss on short mini nifty in the first dip you get today.Then call can be held with 20 % stoploss.

I am expecting mkts to go up by 15 to 20 % in next 2 weeks....as lot of overseas money is likely to flow in,hedge funds are underweight India ,so they will increase their exposure,huge FDI will come in sectors like telecom,banking,infrastructure....and staying short in June future is definately not advisable. If you dont get a trade in June future,buy May nifty minifuture as a hedge...

So either cut loss on Futures and hold call or square off both but dont let the necked short remain mounting the losses..... My view...

You are making money....dont let this position go into a loss....

Best wishes,

Smart_trade

 

[sibumajumdar]

Dear SM,

Considering the fact that with stable UPA Govt,we will trade in higher orbit,I would suggest cutting the loss on short mini nifty in the first dip you get today.Then call can be held with 20 % stoploss.

I am expecting mkts to go up by 15 to 20 % in next 2 weeks....as lot of overseas money is likely to flow in,hedge funds are underweight India ,so they will increase their exposure,huge FDI will come in sectors like telecom,banking,infrastructure....and staying short in June future is definately not advisable. If you dont get a trade in June future,buy May nifty minifuture as a hedge...

So either cut loss on Futures and hold call or square off both but dont let the necked short remain mounting the losses..... My view...

You are making money....dont let this position go into a loss....

Best wishes,

Smart_trade

Dear ST,

Many Many Thanks. Pl suggest me after sq off of present position what fresh position shall I take with small cash (20-25000) as month is closing by. Being new in OP trd not much idea for cov Call / Strangle / Straddle / Calender Stg / PCR etc..etc.. Pl guide. As u suggested I shall sq off MINIFTY JUN at 1st deep to protect gain from OP. Thanks again in adv & GOOD LUCK 2 U.

SM

 

[flashkid]

This is already a very useful and interesting thread.

However, the original question of the OP remains unanswered .

If the market opens with a huge gap up, as expected, what should we do?