Thursday, November 25, 2010

Trading the options on expiry

Well, I went long in Nifty November calls at wednesday nov 24, close. These were 5800 and 5900 calls. The trade was BTST - I was looking for an early morning gap.  On Thursday, the Nifty opened up, quickly went down. I waited for a test of the early morning highs, which did come about soon enough. Nifty was not showing much upward thrust. I sold the calls when nov futures were around 5903. My 5900 calls were purchased at 26 and sold at 25.50, while the 5800 calls were purchased at 61 and sold at 103. One more reason for selling early was my holiday, since I wished to go out after 10 AM.  It was possible for the Nifty to rally further, but there were two reasons to exit early - I did not see enough up thrust + I needed to close the positions anyway. Now, as I update my intra day charts at 9 PM, I see that futures fell all the way down to 5790.

While the markets can stop anywhere, and, do anything, significant support comes around 5550.  Traders should look for stocks where the decline has stopped. In any case, there should be no hurry to go long.

16 comments:

Rushabh Shastri said...

sir, Reliance is still not weak and nice to hear from you about some "TEJI"...just have a happy vacation

amitkbaid1008 said...

Dear Sudarshan Sir,

I am following technical analysis for trading. But since 4 months I have lost much in Intraday/Positional Trading. I spot the trend, enter the trade and then trade move in opposite direction. I want a favour from you if you can. Please suggest one good strategy/setup along with indicators/parameters to be used for Intraday/Positional trading. I will ever be thankful to you.

Krishna said...

Nifty futures February 2011 contract trading on 70 points premium !!

Either ir indicates testing of 6300 once again or if history of 2008 is repeated then Nifty can fall due to "selling in cash" like it did in 2008 while futures kept trading on mind blowing huge premiums & FIIs kept selling in cash !

Only GOD knows what is happening !

Regards

K_Vir said...

Dear Sudarshanji,

Thanks for keeping all of us educated. My experience indicates that discipline (e.g. asking yourself why you are entering / exiting a trade twice, strictly following chosen indicator etc.) are the key success factor. And, it is so funny, but we all end up making mistakes with OPEN eyes :) . May be we still need to train for Mind control.

One simple indicator that I can suggest is 50p simple moving average on 30m / 1 h chart as entry point and 20 period SMA as exit point. Worls well in trending market, need to be careful (stop loss ) during raneg bound market.

By the way, do we have a rule related to 52 wk low on a Friday ?

Warm regards.

gourv said...

Hello sir,
as it is weekend please share something very useful and write a lengthy blog,as u are not comming on tv compansiate by blogging.
regards
gourav

Pi said...

One analyst made a good comment on TV the other day. For positional traders & investors, the best stock to buy would be the ones which made new lifetime highs in Sep-Nov & which now have meaningful dips plus were not involved in any scam.

Can you suggest a few such stocks which have relative strength as compared to broader market & maybe are currently quoting near there support or previous breakout levels.

Also, addressed to other readers, can someone suggest any site where one can find such data. Say list of companies which made new lifetime highs in last 3 months.

dilip said...

Hi sir,

I usually trade with the market sentiments with minimum profits on options and equity.I am planning to get into LIC giving the correction is huge than it should be as I feel it was a personal fault rather than the system . please advise me if i can .

Thanks dilip

Rushabh Shastri said...

Reliance last hope last long!!!!!

ANAS said...

Respected SIR, its me again...

Just dropped in to wish you and other readers , GOOD MORNING!

bye,

Yours
Anas Elias Batla.

men said...

Dear Nr. Sudarshan,
No news from your side, updates are far and rare. Hope everything is fine at your end and u keep blogging more often. I request you to conduct a poll and see how many have access to the channel on which u now come. I don't get bloomberg here (if that is the one).
Regards,

Rushabh Shastri said...

Sir, Sirprisingly after RIL, SBI is not weak, magic possible

rajiv malik said...

cnbc se juda hoke, sukhani ji-

tum na jane kis jahan mein kho gaye,
hum bhari dunia mein ruswa ho gaye...

Jayanth M said...

Hi Mr Sudarshan,
I am following you for the past 6 years on tv,now for past six months on blog.This is my first comment on the blog!!!
I am an investor who is a great fan of yours.I still remember the days when sensex was @ 21k and people were giving targets of 30K in 2008,but you and other few people had a contrarian view.
Some time back you had written a post about VALUE INVESTING.

I am currently looking at Power and Infrastructure as the sectors which have great value.But again I have few questions in my mind which have come from my past experience.
I bought some shares of large cap pharma and auto before the 2008 fall when I thought it had value..but again the 2008 fall brought them even down...but after that it has just multiplied..best example TATA MOTORS.

So do you think power and infra will give better entry opportunity in future ? In charts do you see any base being built ?In my opinion these sectors are the ones which will create wealth in the coming years.....please advice...

pucchhu said...

missing you sir

ANAS said...

Respected Sir, its me once again..

Sir, I duly respect your privacy, and acknowledge your right to have a vacation.

But, SIR, not hearing from you, is really a matter of concern .
I hope evertyhing is fine...

Your truly,
Anas Elias Batla.

jagjit said...

Actually my comment is not on this post. I don't know how to post our query on this blog, so writing here.

1. I want to ask that if the doji formation in the monthly sensex chart and closing of the next candle below the low of doji a confirmation of the downtrend to be started for some more months to come. What are the possible levels to watch out for?

2. I have been studying the charts of some companies where after the first and second sharp waves, multi-month consolidation has been taking place. It is confusing me b'coz i don't have any experience of such huge consolidation phase in the 3rd wave. Kindly suggest the posible scenario for these stocks.

Hoping for your comment soon.