BEWARE: Marking-The-Close Trap on Expiry Day.

#1
If you are trading in Futures market you must know Marking-The-Close Trap.
Else you will get big loss on expiry day. As we all know all the outstanding positions in futures market settle on last Thursday of every month. But most traders don’t know how Futures final price come on expiry day. Futures final price come from underlying stocks weighted average price in last half hour 3 pm to 3.30 pm on expiry day. Insider cunning operators know this system very well. So how exact they make money and we get loss by this system. Let’s check. Insider operators in last half hour on expiry day either start buying or selling with big block orders in between them. So Futures market settlement price either go up or down and insider operators get profit. This is called Marking- The – Close.
SEBI took action against Aventis Biofeeds and its other eight companies for marking the close manipulation. What they do? These nine companies buy Ruchi Soya 72 lakhs Futures taking long position. As shares price goes up they will get profit. As on 27/09/12 on last Thursday the expiry day when Ruchi Soya trading at Rs. 71 out of these nine companies four companies took position with Limit Buy Order at Rs. 64 for 63 Lakhs Shares in between 2.30 pm to 3 pm and same time remaining five companies took position with Limit Sell Order at Rs. 88 for 105 Lakhs shares. When there was 3 minutes left for expiry at 3.27 pm first four companies buying stock at Rs. 88 and at that time remaining five companies make their order size small and equal for buyers and complete deal. Because of this Ruchi Soya price in cash market goes up by Rs. 8 so in Futures market as these insider cunning operators already had 72 lakhs shares they got Rs. 5.86 Crores as profit. That also means those who took short positions in this share got Rs. 5.86 Crores Loss.
Conclusion: “Ghee Dekha Magar Badga Nahi Dekha.” Making money in Futures market is not that easy Game. There are big manipulators playing in this segment always. It’s not possible to take action against them always. So it’s our Retail traders responsibility to play this game wisely especially on expiry day.
Thank You.
Happy Trading.
 

suri112000

Well-Known Member
#3
I have practically seen similar strategy used by operators.

I got a SMS saying that "trade only once per month on expiry day, no need to pay advance charges, only profit sharing that too after making profit, register your mobile on so and so website so that our representative will come into contact"

To see the fun, I have registered on the web site. The web site is decorated with past performance (obviously fake). As the expiry is fast approaching, I started received SMS as countdown to the Big day. Two days before expiry the representative called me..... he asked me to invest Rs.25,000 to Rs.1,00,000 as minimum investment.....and reap the profits anywhere from Rs.1,00,000 to 5,00,000 within a day.

The Big day has finally arrived. Exactly at 11 AM, they sent me SMS saying the trade is in options carrying 4,000 lot size prevailing rate is around 0.50 ps.

At 1115 AM, they sent me to buy....so and so.....option of strike so and so.....fast. When I have seen the buy and sell bids......

they were like this

0.25 buy 10,00,000
0.30 sell 5,00,000

Suddently, there is lot of buying spree and almost 0.30 quantity started getting exhausted. As it was approaching exhaustion, new sell orders started poring in @ 0.30. It all happended for about 10 minutes.

Then they sent another SMS saying that........"now wait and see......this will soon see the levels of 2.00"

After about 15 minutes.......lot of selling spree came in all the 0.25 buy bids got exhausted...........and finally there is no buy bid except sell bids @ 0.05.
All the people who bought @ 0.30 got trapped.

The operation lasted for about 20 minutes, they minted about 50 crores.

What SEBI is doing on such practices.
 

alroyraj

Well-Known Member
#4
I have practically seen similar strategy used by operators.

I got a SMS saying that "trade only once per month on expiry day, no need to pay advance charges, only profit sharing that too after making profit, register your mobile on so and so website so that our representative will come into contact"

To see the fun, I have registered on the web site. The web site is decorated with past performance (obviously fake). As the expiry is fast approaching, I started received SMS as countdown to the Big day. Two days before expiry the representative called me..... he asked me to invest Rs.25,000 to Rs.1,00,000 as minimum investment.....and reap the profits anywhere from Rs.1,00,000 to 5,00,000 within a day.

The Big day has finally arrived. Exactly at 11 AM, they sent me SMS saying the trade is in options carrying 4,000 lot size prevailing rate is around 0.50 ps.

At 1115 AM, they sent me to buy....so and so.....option of strike so and so.....fast. When I have seen the buy and sell bids......

they were like this

0.25 buy 10,00,000
0.30 sell 5,00,000

Suddently, there is lot of buying spree and almost 0.30 quantity started getting exhausted. As it was approaching exhaustion, new sell orders started poring in @ 0.30. It all happended for about 10 minutes.

Then they sent another SMS saying that........"now wait and see......this will soon see the levels of 2.00"

After about 15 minutes.......lot of selling spree came in all the 0.25 buy bids got exhausted...........and finally there is no buy bid except sell bids @ 0.05.
All the people who bought @ 0.30 got trapped.

The operation lasted for about 20 minutes, they minted about 50 crores.

What SEBI is doing on such practices.
Actually since debit gave the new norms for being an investment advisor we can easier complain to sebi about this service provider. Normally these providers play safe and it's difficult to identify the owners behind these operations.
 

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