Picking up nickels in front of steamroller!!

Too good example JVB.
Appreciate if you can share some technical basics with practical examples as above. May be series of 8-10 write ups....

Downloaded data from NSE site since 01-01-1991 till today. In excel plotted the chart for daily movement in %.

About 81 trading days ,out of about 4696 trading days, displays close of NIFTY more than 4% from the previous close.

It is difficult to analysis whether the market opened gap down or slided gradually during the day.

According the chart, on average, the market closed down more than 4% in every 2 trading days out of trading 100 days.

However, if you notice certain period market did not show more than 4% closed down, wherein certain period show many spikes above 4%.

I will look more closely to daily charts for 1 year.

can you pls share your views of selling only faraway OTM calls option alone. and incase market moves upward we can sqaure off our position and sell further OTM call options and continuing this until expiry. I think here money management is very important and low brokerage . I dont know whether this will work and if so how much ROI expected?

I analysis charts to suit my object of option selling.



Ordinary I want to know a rough range of the market and weekly charts plotted with BollingerBands gives reasonably good idea. Presently it gives range around 4900-5500 for July.

MACD histogram gives idea on intensity of trading activity, which appears sluggish during most of last 6-9 months as market sees no reason to go up.

On previous three occasions market topped in anticipation of great earning but seemed disappointed and went down. Presently also the market is at the top range in anticipation of good earnings reports, and that would decided whether the market break out upside or would remain in range.

I also use daily chart to see more liquid movements.

These are just my fleeting analysis, kindly share your views!!

Hi JV.

pls keep on sharing your logic. We can learn something in it.
When do you start selling next month's option?
Is it right time to go for aug series?

You can consider 5700 CE and 5700 PE for August. However, I would advise to wait for a few days as the market in top range. We need to see whether the market is breaking the range of 5400 or not.

i think it shall be 4700PE ...

New Delhi, July 10

Corporates and individuals will soon have one more tool for hedging their currency risks. The Reserve Bank of India (RBI) will next week come out with the contours of the exchange-traded currency options, a top official of the central bank, said.

Very soon (a week or so) you will hear from us as far as allowing exchange traded currency options in SEBI-approved platforms (exchanges), Mr G. Jaganmohan Rao, Chief General Manger, Foreign Exchange Department, RBI, told a seminar on currency risk management, organised by the PHD Chamber of Commerce and Industry (PHDCCI) here on Saturday.

He said the RBI had been in discussions with banks and industry participants over the last one year on the issue of exchange-traded currency options. There had been 43 rounds of discussions in last one year, Mr Rao said. Currently, currency options are allowed only as over the counter (OTC) products.

The RBI Governor, Dr D. Subbarao, in the annual monetary policy statement released in April this year, had announced that the central bank had decided to permit recognised stock exchanges introduce plain vanilla currency options on spot dollar/rupee exchange rate for residents.

In India, the level of hedging as part of currency risk management is quite low. Only 3 per cent of those with forex currency exposure have gone in for hedging their risk, it was pointed out.

Convertibility

Meanwhile, Mr Jaganmohan Rao advised small and medium enterprises (SMEs) to limit themselves to simple products (forwards, options and swaps). Never go for structured products, he said.

On full convertibility of the rupee, Mr Rao said that full convertibility was required, but noted that the country was not yet ready for that.

We are still to meet certain conditions of the Tarapore Committee report (on full convertibility). But RBI Governor is the best person to answer when India will have full convertibility, he said in response to a question on full convertibility.

On how much the Indian industry had lost on account of the global financial crisis through the currency channel, Mr Rao said the RBI only had rough estimates' on how much the industry had lost.

We know about the banks and not about industry. We only have some rough estimates on how much industry lost. As and when industry had to make huge payments, we get to see the tussle between industry and bankers and thereby get some more information, he said. Already, exchange traded currency futures are permitted in two recognised stock exchanges in respect of four currency pairs.

http://www.thehindubusinessline.com/2010/07/11/stories/2010071152490300.htm