Nifty Option strategy as high IV Due to Election Result

[Vertigo_1985]

Vertigo, all those factors also hint towards waiting of big boys.

I regret closing my call options trade so soon, but if we leave yesterday price action, then before that, nifty was clearly showing weakness. No real upside momentum of any kind. Moreover I had down bias for the overall markets "which I still have". But that down move will most probably happen only on 16 May, if NDA does not get a clear majority.

So I will have to wait before buying any puts. I did a quick scan of the markets and a lot of stock puts have gone down by 20-30 % yesterday. If markets go up again on Monday, then these puts will become even cheaper. And I will buy them at that time. I admit that my down bias might be wrong, but the bear within me will not die until I burn atleast 20-30k on buying cheap OTM puts of high beta stocks. :annoyed:

I can afford to loose this money, provided the risk reward ratio is extremely favorable in those selected puts. In the scenario of a major down move in the markets, because of disappointing election results for the bulls.

low volume, overlapping candles, intraday ranging action are signs of a healthy correction and opportunity to add, if weakness was there then we would have seen different kind of selling.. like regular basket selling with advance/decline favoring declines.

i understand that you are bearish but dont fight the market, whats the logic to sell when market says buy ? sure you can lose 20-30k now but what about 5-10 more trades likes these ? can you lose all of them and still will be comfortable ? with this attitude you are going to get burned both financially and psychologically, think in long terms.

Have a bearish view but be ready to be bullish as well. Let market confirm that its bearish, how charts have to look like that its bearish ? or how overall market should look like if its bearish ? then only put on a trade.

 

[trader_ks]

Very true vertigo
at this level i am also bearish but i will not go against chart because all the market level is decided by majority. If chart is showing strength i will buy( may be less quantity) but will not sell rather wait for weakness reflection in chart

 

[toocool]

low volume, overlapping candles, intraday ranging action are signs of a healthy correction and opportunity to add, if weakness was there then we would have seen different kind of selling.. like regular basket selling with advance/decline favoring declines.

i understand that you are bearish but dont fight the market, whats the logic to sell when market says buy ? sure you can lose 20-30k now but what about 5-10 more trades likes these ? can you lose all of them and still will be comfortable ? with this attitude you are going to get burned both financially and psychologically, think in long terms.

Have a bearish view but be ready to be bullish as well. Let market confirm that its bearish, how charts have to look like that its bearish ? or how overall market should look like if its bearish ? then only put on a trade.

One of the most sensible posts recently that I have come across

 

[Somatung]

low volume, overlapping candles, intraday ranging action are signs of a healthy correction and opportunity to add, if weakness was there then we would have seen different kind of selling.. like regular basket selling with advance/decline favoring declines.

@Vertigo_1985

Let me give you an other example with exactly what you posted in the first part of your post about pure TA. The second part I did not follow, as I only followed in this case TA, so I not can ad any information to this. Here the chart about: Infosys

Have a nice weekend

 

[Vertigo_1985]

@Vertigo_1985

Let me give you an other example with exactly what you posted in the first part of your post about pure TA. The second part I did not follow, as I only followed in this case TA, so I not can ad any information to this. Here the chart about: Infosys

Have a nice weekend

Hi Somatung,
What was the trend in infy during that action ? i think that should answer your question.

Everything should be seen in context, in this case it's a downtrend and to me this overlapping, ranging action was even weaker than nifty action as no one here was interested to buy even after such a big fall, if no one is buying then why the hell i should buy ? when 3140 breaks then all those who entered long above will be trapped and so enter short when it breaks..
imo one need not know much of technical analysis in such cases as even after good numbers it closed near lows, if positive news isnt lifting a stock then what will ?

 

[Somatung]

Hi Somatung,
What was the trend in infy during that action ? i think that should answer your question.

Everything should be seen in context, in this case it's a downtrend and to me this overlapping, ranging action was even weaker than nifty action as no one here was interested to buy even after such a big fall, if no one is buying then why the hell i should buy ? when 3140 breaks then all those who entered long above will be trapped and so enter short when it breaks..
imo one need not know much of technical analysis in such cases as even after good numbers it closed near lows, if positive news isnt lifting a stock then what will ?

Hi Vertigo

I just wanted to bring in some thoughts in the flow of the post's, as I think it is very important to spot at any good post, in this case from you thumb, from different angels. So thank you to response the way you did. :clapping:

And yes, the trend is really, strongly down, which is not the case in Nifty (Will ad to this). In Infosys one support level after one support level was broken and 3000 would be the next good support level if the 3050 doe's not hold. Then down to 2900 and then free fall.

I heard once: Sell by good news and buy on bad news. Personal choice and also some thing which had to be seen in context to other things.

Nifty: Yes, the up move was expected, as the support level around 6650-60 was expected to be a good one. Why? One of the major and very important points in TA you did not mention with one word: Fibo levels. You may know the 50% retracements rule. If so, then you see that the 6650 - 60 level was fulfilled at 50% retracement. Very strong buy signal. This just a little ad to your valuable post, nice to chat with you and take care

 

[mukuldunnu]

Hartley Thanks a lot to all about all ur'r opinion

But see I am not talking about High Volatility ,Low vol and more of other indicators ......

Or what big brothers r doing till what time we will remain young ?

simply I m trying to get 122 points ye forgot one point as toughard

mentioned forgot about the volatility at Election-2009 at that Time it was near

56% but what happened after that it collapsed , and I was not much involved in options so much at that time , As I was in commodity at that Time

See just the reason behind all this is that :---------------------

What I think....... I am repeating..... I don't see much upward moment cause market has anticipated the Modi govt. for economic reforms , So supposes if Mr. Modi come with clear cut majority " I don't think market will move much

higher then last high of 6869 reason behind no much Fundamental Change ya but

in case of less then majority market can go down sharply

So that's my target and yes of still we have room to make adjustment or we can make delta hedge

Easily beyond 6300-7100 range of nifty we all Know so many ways to do that


Thanks

Mukul

 

[Vertigo_1985]

Hi Vertigo

I just wanted to bring in some thoughts in the flow of the post's, as I think it is very important to spot at any good post, in this case from you thumb, from different angels. So thank you to response the way you did. :clapping:

And yes, the trend is really, strongly down, which is not the case in Nifty (Will ad to this). In Infosys one support level after one support level was broken and 3000 would be the next good support level if the 3050 doe's not hold. Then down to 2900 and then free fall.

I heard once: Sell by good news and buy on bad news. Personal choice and also some thing which had to be seen in context to other things.

Nifty: Yes, the up move was expected, as the support level around 6650-60 was expected to be a good one. Why? One of the major and very important points in TA you did not mention with one word: Fibo levels. You may know the 50% retracements rule. If so, then you see that the 6650 - 60 level was fulfilled at 50% retracement. Very strong buy signal. This just a little ad to your valuable post, nice to chat with you and take care

thanks Somatung, always good to get input from others, appreciate it :thumb:
Current downtrend in IT stocks i think is due to rupee appreciation in anticipation of NDA getting majority.
IT stocks maybe better option to enter long if we have a hung parliament but only after things settle down because if nifty falls in a big way then all stocks will fall, im saying that because of my opinion about rupee, which will also depreciate if we get hung parliament.

Right now i have bullish bias till 16th, on 16th i am more bearish but more and more people are getting on the bear side on 16th and thats the only sign of worry for bears as of now according to me...

Regarding fibo, i learned analysis from YTC so fibo is not something i use but thanks for pointing out the levels, will surely keep in mind. Actually i stopped adding or reading about technical analysis tools for quite some time now, psychology is my priority as of now and it still needs a lot of work...

 

[mukuldunnu]

toughard yes Agree with u... vol n OI is really low ,,as due to high IV of options only buyers are here so options r being expensive

 

[umash2000]

VIX at 37.71 but are you aware where is Historical volatality?

Despite high IV,nifty witnessing trading within a small range!!!!

But obviously,mismatch is happening.Historical volatality seen at 13-14% now.The gap between
VIX & HV is big at the moment and is essentially attributed to an upcoming election event.
Thus,VIX is expected to fall down & one can witness increase in Historical volatality.

Nifty got into volatality mode yesterday...

Further,as one see IV of next series,one could see that its quoting at 25-30..Thus,drop in IV is imminent..

Views welcome!!