How to trade on Monday ?

With UPA to form govt certainly, that too without the help of LEFT, may propel the markets, with a gap up of atleast 600/700 pts. How would anyone play the upside whether intraday/ positional trades?
discussions / views ?

You should have taken positions in options on friday itself mate.

Hello Capricorn,
I have bot 3500 May-CA at 270 Thursday & hedged Friday with sell of June Minifty at 3685/-. I am new to option strategy. Afraid of monday gap Up/Dn. Pl guide what should I do to maximise profit/minimise Loss. Thanks in adv.

Regards,
SM

That was a terrific answer !

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

SM,

You Have No Problem As Far As Your CALL Is Concerned

This Is What You Can Do On The First Down Tick Put An Order Of 3 Lots (Hope Your Capital Allows) For BUY Of MinNifty, Which Will Essentially Square Off Your One Lot, With 2 Lots In Long.

Towards The End Sell Off One Lot & Hold One Lot.

On Your May CALL Of 3500 Theoretical Close Will Be Close To Your Buying Price & This Could Give You +130 x 50 On Your Buying Price, You Have 2 Alternatives Either Square Off Towards The End On Monday Or Square Off Tuesday Or Wednesday

Happy & Safer Trading

SavantGarde

I was expecting unstable goverment so I sold all my stocks now the same will go up on Monday .........but atleast I eliminated the risk of loss ...

In share market this is all time story if our guess is right we make money else we loose it (if we have any open position)

We can not challenge our destiny why not we put all over efforts the verdict rests with GOD ...

Hare Krishna
Ganesh

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

The thing is that most investors (including our big mutual fund managers) consider options only as a vehicle for trading. When the markets went down in January 2008, almost all mutual fund lost 20-30% of their NAV in a week. Almost all of them lost 48% or more in 12 months ending in January, 2009. It means none of them had bought any insurance (read Put options) for their portfolio.

Not many retail investors even know how to calculate beta and how many puts of what strike to buy as required protection. I think it is about time someone start a thread here to teach portfolio protection by using options.

While It Is An Excellent Idea To Start A Thread On How To Protect One's Portfolio By Various Means Of Hedging, My Plate At The Moment Is Full.

All I Can Offer Is An Excel Sheet For Options Strategy Which Calculates Greek, Including Rho & Graphs Of Payoff. Infact Little Work Is Left On It To Complete The Whole Thing, Similar To My Trading Organizer

Happy & Safer Trading

SavantGarde