Sunday, November 20, 2011

NIFTY options trading strategies for november 21st november 2011

Hi friends,

Today post is long one to read but worth it for all traders.

Has anyone seen the documentary of 2012 Nostradamus it says that doom is inevitable.What is happening or what has happened in past 1 year clearly suggest it.Although he has not made that much hype as the world is going to end at 2012 people,he throws logical light on what will happen.

You take the events and they are happening Japan best economy in world battered by tsunami,earthquakes happening around the globe,storms, in fact natural disasters are gonna be at peak in 2012.Already some heavy solar storms are predicted in 2012.we will have to wait and see what happens.

Another major part is bureaucrats all around the world have seems to taken granted that they can mould policies to their interest and amass large amount of wealth which is not true.
U take anybody like of Saddam Hussein,gadaffi,laden...recent Italy PM,all will have to fall.People already started showing their angers over the way they hv taken the world for a ride.

So back to Nostradamus his documentary has also shown economies falling,governments getting bankrupt..Greece Italy Spain Portugal are seems to be what Nostradamus had said
But he also said humans will be given one chance to control their greed if they dont do it then end of world will be inevitable.Simply imagine what would world be if satellites are knocked out,Internet is not there.

.Already the Greece Italy Germans are on ticking time bomb,its just a matter of time when things will get worse for them.To save them European union has to grant bailout which they will not do anymore or else come out of EU and euro as a currency and start printing money which will hamper economics of Europe as a mighty continent.
So jist of this is world markets are gonna be at extreme volatile in 2012.This is what i feel.

Now back to markets where are we heading,

Few things that are important to option buyers is they are at best safe when they are at the top where markets are at major resistances and you buy the puts and relax or sell calls and relax.
But when we start a major fall it is very difficult to know whether we hv purchased call at bottom or in the middle of a possible bounce.

When a falling rally seems to reach the bottom or middle it gets really cozy to buy call or sell puts.We really dont know whether what will happen next ,whether at what levels we should exit.
Chartist everywhere draw charts and show things when they hv happened ,becos after nifty has traversed it is cooler to draw some nice lines and charts but what will happen next is left to technical levels.
This is the situation where u need expertise where they pour their inputs to help u with that storm.Although following technicals is a must.Take many inputs from many people and decide your own strategy.

what happened during recession falls was a sharp bounces of 700 points on nifty which left people in losses.

Nifty last some 2-3 months back hit the 4700 zone and bounced ..then in matter of time again it went to 4700 zone again bounce and then blast upwards.so markets almost made fool of everyone trapping everyone into buying puts at 4700 and bounce occurred.But i played them smartly i sold 4500 put at that moment and the next rally earned me money nice without worrying where is the top.

Now levels of  4500 arnd are classic mutual fund buy levels.People all India its sooner when they hv to declare their investment for 80c wherein they enter into tax saving mutual funds and NAVs of mutual funds are really at nice buy levels so at any time level of 4500 is not so easy to break for that we need recession like momentum

Nothing can be ruled out for now.

I dont get time to post charts but as it was weekend i decided to post some chart this chart will be useful to you no matter if i dont post any update for 2-3 days.

This chart shows  a  long term inverted Head and shoulders pattern and we are heading to test neckline at 4600 zone where the pattern speaks that comes a buying support.

So i am going to take small risk of buying puts in hopes of we testing levels of 4600,one can take a safe trade of selling 5200 call where rally resistance  will come.This i am talking of is DECEMBER series.

 so we cover at 4600 based on momentum of fall and world markets picture and again take a risk of entering 5000 call once we hit 4600 in hopes of a sharp bounce which will be fueled by mutual funds money.

SO decide your plans chart is in front of you.One more thing if u have money in pockets dont worry to take risks.There is no point sitting on the shore of sea and enjoying the waves.Real fun is to ride the waves.what u will get is experience and courage and thrill.

comments are enabled for all.pour them in .Give ur suggestions also.

10 comments:

  1. I had a Question regarding Open Interest.
    OI shows for every contract, there is a buyer as well as seller,so how can we say that buying is done or selling is done in a contract?How OI gives an idea of accumulation?

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  2. All those who use OI as a indicator to decide on which side is stronger is total wrong i feel.
    OI definition states total number of open positions for that contract in the market which includes buyers as well as sellers.

    Usually tv guys say that Huge OI built up means that more number of writers at that level which is true at times but cannot be banked upon.

    I have been trading nifty options since long and i hv seen such days where a strong OI level was broken with a good momentum and what followed was a disaster.

    Any support a big support is usually not broken so easily so writers write at that levels ,the same happened with level of 4700 some days back attempted to broke twice no success and went straight up.

    Usally writers are hedgers and they try to protect their levels no matter what.

    But when a super breakout or breakdown occurs all that open interest can get killed in one shot.so...

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  3. Dear WB,
    "So i am going to take small risk of buying puts in hopes of we testing levels of 4600,one can take a safe trade of selling 5200 call where rally resistance will come.This i am talking of is DECEMBER series."

    When 200DSMA today is 5373 & since May 2011 when Nifty is trading below that SMA & when Nifty is trading below DLEMA there is no question of going positionally long for higher targets.

    In 2011 Nifty except once has not closed below 5000 on the day of FNO expiry.Probably this time too due to oversold conditions,it would close above 5000,so still would like to wait further for any put buying...

    Nifty,Trading JUST BELOW DHEMA,but not able to cross DHEMA or trading above DHEMA and then fails to sustain or stay above that DHEMA is always the best buying point for any nearest/longest OM Put Option is one observation...:)And as always the remaining days left for expiry is important factor too....

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  4. 4600 put buy is a risky trade but we are buyin december series so that even if we get bounce for some weeks we dont miss the fall.

    so whether to wait for 4600 put buy rite now or buy immidiately will only make difference if we get some rapid falls.Any rapid fall will make u feel like u were left out of this rally.

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  5. Okay,i say when a writer writes on the top of the price with huge built up....there shud be equal number of buyers also....so certainly one side shud go into loss at the time of expiry.

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  6. thanks for the post. it is really excellent.

    Sir, it is honest question? warren buffet is a real name or nick name.. if it is real name, thanks for following indian index and giving the stategies.

    all the best for your perceived positions.

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  7. gr8 post what is the expectation for 2morrows mkt will it trade in green i am short should i square off the positions

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  8. Though the trend is down one should or must consider time decay factor,specially,while buying.

    Why any type of option "buying" is always tough,because to make money the timing of buying with trend must be always perfect,and this is the biggest challenge.Buying Price is always secondary factor....it does not make any that much difference.So just referring your sentence again "following technicals is a must" :)

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  9. warren buffet is giving advice .Take it,grab it but dont let it go.Thks Mr Indian Warren Buffet happy to know someone at least takes time off to share his knowledge.Keep up the good work my friend.

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  10. @all- if u feel u r earning some profit then please publish my blog to maximum places you can.

    @unknown:- you are welcome.
    @mynac- To avoid time decay i have told everyone to strictly enter december series.so time decay is very much nill.
    @anaonymous- watch out the blog i may or may not get time to reply to individual post.watch out for blog
    @bala :- let the suspense remain as it is.

    Thanks everyone.
    If u know any trend that i left out tell me also.

    bye new post will be sooon.

    ReplyDelete