Nifty to retest 2300-2250

[prasadam]

yup. i saw that thread. however, you have to keep changing your market opinion as price action changes! in that instance, breakout failed in the first week of january, but nor were the october lows broken. we are presently on the edge of the triangle and a break-out is imminent. it could be either upside or downside, only future will tell that. however, i have a feeling we won't have to wait for long. 3 to 4 days max.

That's why I said

How ever at present I am neutral as Nifty is trading in the range 2650-2850. I
will go for positional trade after the breakout/breakdown of the range, with confirmation from a big upmove/downmove bar.

ayh. another thing there are no eternal bears in the market.

 

[prahlad1981]

That's why I said

How ever at present I am neutral as Nifty is trading in the range 2650-2850. I
will go for positional trade after the breakout/breakdown of the range, with confirmation from a big upmove/downmove bar.

ayh. another thing there are no eternal bears in the market.

yep. just curious about one thing. when you are neutral, are you in the market or just wait on the side-lines? i mean, there are some market-neutral F&O strategies like Call-writing/Put-writing. do you trade any such positions?

 

[prasadam]

yep. just curious about one thing. when you are neutral, are you in the market or just wait on the side-lines? i mean, there are some market-neutral F&O strategies like Call-writing/Put-writing. do you trade any such positions?

Doing intra day. no overnight positions. A strict no-no to option writing. I am not interested in collecting small premiums and giving away big on one bad day. I prefer knowing my potential loss at the begining itself. Different people different ideas.

 

[prahlad1981]

Doing intra day. no overnight positions. A strict no-no to option writing. I am not interested in collecting small premiums and giving away big on one bad day. I prefer knowing my potential loss at the begining itself. Different people different ideas.

right you are. different people like different timeframes. intraday trading is definitely not for me. if you have access to real-time data and charting software, its a different story. also, its pretty much a full-time business. you need to constantly keep track of upticks/downticks, check for fundamentals, quarterly-results, news, TRIN, TRIX, etc.

I prefer swing trading lasting 2 to 4 weeks. The intermediate trend patterns are much more predictable and more importantly, you don't have to sit doing on-line monitoring of stocks continuously. trading could be done like a part-time activity.

 

[prahlad1981]

Call-writing and put-writing are not market neutral. Volatility slaughters call / put writers.

Nothing is market neutral. It is a myth.

of course, nothing is purely market-neutral. you have bet on either price-direction or high/low-volatility.

a.) if you bet on price direction, you buy/short stocks, futures and buy calls/puts.
b.) if you bet on low volatility, you write calls or puts depending on your bias to upside/downside.
c.) if you bet on high volatility, you take two contra positions. for e.g. buy same quantity of NIFTY calls and puts of the same strike-price. as soon as there is a break-out, either the call or put will become worthless. however, you will earn handsomely on the other, depending on the extent of the break-out.

 

[prahlad1981]

Can you name any successful market neutral hedge funds or traders ?
Can you name who are the largest option writers (players) ?

Whatever market neutral strategy one uses - unless the trader can predict the direction correctly, he/she cannot make money consistently.

In (b), when you say in times of low volatility you write calls or puts - that is as good as saying buy low and sell high.
It is oft repeated statement by book authors without any scientific evidence.

Low volatility leads to high volatility and vice-versa.

Volatility is measured using standard deviation and variance from the mean. So, let us say, if the price rises each day by exactly 1%, what is the volatility ?
Now, because the volatility is low and you wrote an OTM call (say 10% OTM), you would be called out in 9 days without any chance to exit the calls at break even. The volatility would not have changed in these 9 days.

So do you see any connection between low volatility and direction of the market ?

Hi,

I think Shankar Sharma of First-Global is one hedge-fund manager who is market-neutral. at least thats what he says on CNBC. Also I think his track record in predicting this current bear-market was too good. He was the first to take a negative stand (as early as jan-2008).

Now, in case of (b), you have to take at least a bias to the direction while writing a call/put. you have mentioned about standard deviation and variance. so write a put when the when the price is already down by 2/3 SDs (or write a call when the price is already up by 2/3 SDs). this is a combination of both having a sense direction and remaining market-neutral. you are market-neutral in call-writing because you don't require the price to go up/down to make money. you just write the call and collect the premium. of course, you lose a lot if your prediction about volatility is wrong and price went even lower (in case of put-writing). but here, you are wrong about volatility which proved to be higher than your expectation.

in case of (c), it is purely a volatility based strategy. as you said, the market alternates between high and low volatilities (or between trending and bracketing). you are betting on high-volatility. you can use this strategy during breakouts from geometric patterns or penetration-of/rebound-from key support/resistance levels and trendlines.

i think the relationship between price-direction and volatility is like the one between sea-tides and ripples. price trends towards one direction like high-tide/low-tide (water rises to shore during high-tide and recedes back during low-tide). presently we are in a down-trend (or a low-tide). but there are secondary ripples/waves (reactions) that go against this main tide. they don't succeed in doing so but they succeed in causing what can be called a disturbance (volatility).

 

[haritejsingh]

Hi According to me DOW will go near 6000 and if dow will go to 6000 level then you can think what will happen to indian market. it is definate that nifty will retest 2300-2250 but there is a posibility that i can go much lower but that will be only for some time. accordin to my calculations the lower target for nifty is 2272.

 

[munde_77]

hello friends, my price analysis says nifty will retest 2300 to 2250. what you say? please contribute your valuable information.
i shorted nifty ,good quantities. will short remaining on rise. watch out for 2870. strong kick ass resistance lol
looking forward frm u guys , good luck shreya

When will the nifty retest 2300-2250

 

[hari123]

starting next tuesday there is likely to be short covering and market will fall only after expiry of feb series.if there is no short covering next week then holding of even 2500 level is doutful as then there will be fast exit of big foreign fiis and hedge funds.for short term play fundamentals do not work