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Market Analysis - Technical View
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BULLET narendranainani.blogspot.co
MARKETS DEPENDING ON AMERICAN MARKET MOVEMENT
BSE Sensex(12526.30) and Nifty(3818.30) closed 4.4% and 4.2% down last week.Inflation was at 11.99 v/s 12.14 last week.Crude oil was at 93$.Mareket had fallen sharply during the week on Lehman Brothers,Merrill lynch and AIG insurance’s crisis but failed to recover in spite of steps taken by U.S. government by banning short selling and giving a bail out package..Support for sensex is 12000 and for Nifty 3680.Resistance for Sensex is 13100 and Nifty is at 3980.Local fund buying was visible against selling of FII.Nifty put-call ratio was 0.67.Nifty 3800 put option added open interest.Hindustan Lever and Ranbaxy added open interest.
Strategy for Future Option players.
1)SBI(1483.65) Lot Size-132 Shares.
Buy one call option of October month strike price 1470@86.75 Rs.
Sell one call option of October month strike price 1560@50.00 Rs.
Premium Paid=86.75*132=11451.00 Rs.
Premium Received=50*132=6600.00 Rs.
Net Premium Paid=11451-6600=4851 Rs.
Maximum Profit=1560-1470=90*132=11880-4851=7029.00 Rs.
Maximum Loss=4851.00 Rs.
Break-even=1506.75 Rs.
2)IDBI(76.90) October month future-Lot Size 1200 shares.
Buy one lot of IDBI October month future@76.90
Sell one call option of Sail October month strike price80@2.95 Rs.
Premium Received=2.95*1200=3540.00 Rs.
Max Profit=80-76.90=3.1+2.95=6.05*1200=7260.00 Rs.
Max loss=Unlimited.
Trading Idea
1)DR REDDY(550.10)Buy this stock in decline and trade.
2)SATYAM (314.70)Buy this stock in decline and trade.
...
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After such a massive sell off the TRIN of NYSE is 0.08.... which is height of overbought lol and with such a divergence where the dow sold off but NYSE went up this is a highly bullish indicator. Of course i am comparing dow prices and NYSE TRIN.It would be better to compare DOW TRIN AND DOW PRICES instead which i will do from today.
Watch this space, let me check DOW`S TRIN.
The DOW however shows accumulation so the TRIN of dow should be overbought.
Dow closed lower though LOL... but sometimes these bullish scents are picked by the markets before dow picks its own scent and trades in the green. I guess we should be optimistic for the coming week.
However let me check Nifty and DOW TRIN.
Just plain views, i have been right only 20% of the times so dont trade based on these predictions....
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Nifty closed above 3824? Bailout passed as well :-) But unfortunately no bounce back :-(...
In reply to:
EWT Alert: Bounce Back on card
Posted by :
sam_pd
TERMINATOR needs $7 billion bailout for California. 
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TERMINATOR needs $7 billion bailout for California....
In reply to:
EWT Alert: Bounce Back on card
Posted by : sam_pd
house passes the $ 700 billion bill but dow just dives down and almost loosing all the gains.
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house passes the $ 700 billion bill but dow just dives down and almost loosing all the gains....
In reply to:
EWT Alert: Bounce Back on card
Posted by : sam_pd
nifty is closed at 3824.55 ha ha who is playing this game, some one has the mastery . EWT just being lucky again, let us see if market remains lucky or not.
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Yes I remember we talked about it while ago, I totally forgot it because of the too much concentration in work and market...sorry.....
In reply to:
HELP HELP HELP !!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by : raj_tibs
Indira Securities.. I have a terminal software... You can check with Indiabulls as they also have a terminal software, and may allow trading in LT options for terminal users.
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Indira Securities.. I have a terminal software... You can check with Indiabulls as they also have a terminal software, and may allow trading in LT options for terminal users....
In reply to:
HELP HELP HELP !!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by : vam_aru
Dear Raj_tibs,
Which brokerage do you use for Long term options?
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Dear Raj_tibs,
Which brokerage do you use for Long term options?
...
In reply to:
HELP HELP HELP !!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by : raj_tibs
Why selling options is better than buying options?
1. You get the time and risk premium rather than pay it
2. You can rollover your positions.... e.g. lets say i sell Oct 4000 PE, believing that the market will be above 4000 on Oct 2008. Now, if the Nifty is at 3800 on Oct 27, i can still rollover the position profitably! If you have noticed, the options for the next month are always more expensive than the current month. So on Oct 27, i will be able to buy the Oct 4000 put for about 250, and sell the Nov 4000 put for about 350!
Of course, 2 will work as long as you are able to maintain the margin requirements, and as eventually the market will go above 4000, you will not suffer a loss. If you had bought a 4100 call instead, your money is gone if Nifty falls!
Buying options is ok for the purpose of hedging... e.g. when buying a future, buy a put option to protect the losses on the downside (even here, i find selling an out of money call works better). e.g. if the market opens at 4100 tomorrow, and you are still bullish - buy a Nifty future, and sell a 4200 call (say for 100 rs). Now, you are maximum profit is limited to 200 (100 points on the future, and 100 for the call premium)... And on the downside, you do not make a loss till 4000 (but your losses are unlimited)
Lets say you protect the downside by buying a put - say 4000 put at Rs 100. Now your losses are limited to 200, and your profits are unlimited (but you make profits only if Nifty crosses 4200, when you buy the future at 4100).
One scenario where buying an option makes a lot of sense to me is when looking at really long term positions.... e.g. a position for more than 3 years.... So buy a Dec 2011 4000 PE at say 1000, and buy a future. You make profits if nifty goes above 5000. And if you think the Nifty will be above 7000 in Dec 2011, 1000 is a decent insurance for a possible profit of 2000... you can reduce the insurance by buying more futures (so buy 1 put and buy 2 futures).
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Can we buy Reliance Industries for the short tem gain...
In reply to:
Expect flat to negative opening: Gujral
Posted by : MMB Messenger
Passing out of US bail out package was not able to lift the sentiments in European and Asian markets as well. Nifty may have a flat to negative opening today.
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I think that is too personal a question ;) But I dont mind.
1996 - Started with Goldman Sachs - $4000.00 starting capital.
Used to purchase IPO shares of a company called XYLAN. Was alloted 100 shares at $26.00 = 2600.00 Flipped it on the market open on the 2nd day for $55.00. My very first trade.
By the end of 1998 - my portfolio was worth about $12k after paying $3k in taxes for short term trading.
1998 - 1999 - made a bunch on several IPOS - I open new account with a new broker and flip the shares on the first or 2nd day for massive gains
Couple of examples:
Inktomi - zoomed to over $150.00 during the 1st week. Flipped it for close to $200
By end of 1999 - was sitting on a pile of cash - even now my IRA with ameritrade is $124K - I was contribution $2k per year since 1996 - so in 12 years 24k is now 124k - which is right now 80k in cash and 14k in stocks.
Relocated to India in 2006 - spend 18 months studing the market. My very first trade here was a short sale.
Since March 4, 2008 have done 44 trades - I lost 29 of them - but my losses are limited to 5% of my capital invested.
I made money in only 15 trades.
The 15 trades made me an avg of 110% of capital deployed. I only trade options - NIFTY and couple heavy weights like Reliance, Infosys & ICICI
I look for liquid options - dont want to trade in options where less than 10000 contracts are trades on a daily basis
In India - started with 75K and now am at 210K - I will end up paying close to 20K in taxes.
I may avoid that as I will write it off against losses in my MF`s
...
In reply to:
HELP HELP HELP !!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by : radhika_nandlal
Winwath,
Would it be too personal if i asked you how much trading capital you have and how much it has appreciated since 1996 when u began to trade using TA?
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Dear shareviews,
My kind of calculations have worked for me in INDIA till now.
Do you think INVESTORS were responsible for worldmarket fluctuations of 2007 to 2008 period in Metals, USD , stocks , commodities etc !
In ANY market , SPECULATORS and OPERATORS are ALWAYS there.
They make you think what they want to and they trade just in opposite direction.
My view is, Operators are in BUY MODE at present .
Rest is all crap.
They were the ones who had initiated shorts since Oct2007 , they are wise and deserve standing ovation. Now as per my view they have ALREADY covered their shorts, have INCREASED their longs or holdings in the companies they are interested in .
By August 2009 to March 2010 we will have DOUBLE TOP in bse30 index and nifty50 index is VERY PROBABLE POSSIBILITY as per my own personal view based on my limited knowledge on charts.
We may even cross previous tops if enough shorts are created at lower levels by fools.
2 weeks to go now for end of bearish sentiments.
For level crazy readers- 12050, 11600, 11200 for bse 30 index level.
Usually when stocks are available cheap and at attractive rates , and even when there is enough cash available , most investors do not buy anything at all as they are scared.
They buy near tops and then feel sorry.
3 day simple moving average will be good friend who will let you know when you may buy. Any close above 3 day simple moving average now onwards will signal new fresh upmove for the market.
For smart ones - hint- USA and INDIA elections
worst quarterly result announcements will play pivotal and important role.
Thank you all responsible for boarder of the day
warm regards
Vipul Lashkari...
In reply to:
TURNING AHEAD 30 Sep 08
Posted by :
shareviews
Dear amarakbar, As per me, your kind of calculations will work out only in an investing environment where matured investors dominate. But unfortunately in India we have mere speculation happening all the time and not so knowlegable investors act according to not at all knowledgeable market gossipers who are mainly the operators. Prices of individual stocks may go up and down in cycles based on the operator game. I feel there is not going to be any significant change in the scenario for the next six months. I do not anticipate any improvement in the overall situation in the next 3 weeks time.
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I said Dow will exhibit a tachy heart today and how true... gosh my juicy calls... hope they give me double profits on Monday...hari bol!
Both predictions came true, a big fall in sensex versus nifty and then a tachy dow... lol lol.
not boasting....
In reply to:
Bradycardia and Tachycardia For 3rd Octob
Posted by : radhika_nandlal
Dow seems to be suffering from Brady and tachy alternatively. Ystday it was brady today it will be tachy heart.
The NYSE TRIN at 0.2 is very overbought even when they sold off so much which is extremely bullish, yes extremely bullish. So shorters should think twice before they keep open short positions for the weekend.
Our own sensex and Nifty are very bearish in all aspects including TRIN. In fact the SENSEX shows an RSI sell too so it might fall more than the Nifty. But since bull power and bear power of Elder Ray favor bulls it might not close at day's lows. It may show some shortcovering at the EOD.
All are probabilities here. My success rate is only 25%. Those who follow me might be risking their money. I love to study markets and this is just a view.
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dear rudra,
sorry was a bit busy today.well i hav understood these puts and calls.now in todays market u wud hav bought a put but at what rate [strike rate].please explain
thanks rashmi...
In reply to:
HELP HELP HELP !!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by : rudra_sinha
Thanks Rashmi. Besides my software job, I am also a financial domain trainer in my company and I take sessions for my colleagues on different components of Capital Markets. So, I constantly think of ways to make things easier for people to understand, especially the complex portions like Derivatives.
Alright, now back to the point. I was almost certain that you would give me this answer. The answers you gave are just opposite in perspective, or in other words the trading perspective. Let me explain.
You said that farmer would go for a PUT. Wrong answer. If he is making the contract, he wants to sell wheat and so he has to give the flour company the right to buy i.e. a CALL. :)
If the flour company is making the contract, they want to buy wheat and so they have to give the farmer the right to sell i.e. a PUT. :)
There is a subtle difference between Option contract writing and Option Trading. Option trading is in line with what you said. But option writing is opposite. :)
Lets take an example from the stock market now.
Say, I have 100 shares of L&T and CMP of L&T is 1200. I expect that L&T shares would go down from here and touch 1000. So, I want to still sell my shares at 1200 rupees per share at the end of October. If I want to sell, somebody has to buy. So, I want to give that person the right to buy L&T shares from me at 1200 per share at the end of October. So, I would write a CALL. Now, the person who is buying the CALL is bullish on L&T. So, he is buying the CALL. So, the writer/seller of a CALL is having bearish view and the buyer of the CALL is having bullish view.
Now, if I had a bullish view on L&T, I would like to still buy L&T at 1200. So, if I want to buy, somebody has to sell (Who thinks L&T would go down from here). So, I would give that person the right to sell L&T to me at 1200. So, I would write a PUT. So, the writer/seller of a PUT is having bullish view and the buyer of the PUT is having bearish view.
Are you clear now on Options writing and trading concept?
What we do mostly is option trading. But I wanted to clear the whole concept first and then take it further. So that you know what you are doing and what are the risks. :)
Let me know if you have any further question on the concept. I shall answer your questions on in-money-call etc. when you are absolutely clear on the concepts.
Thanks,
Rudra
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what is the down side target of nifty...
In reply to:
Expect a mild recovery: Bhambwani
Posted by : MMB Messenger
The outlook for the markets today is that of guarded optimism as the near term outlook is that of an oversold market. Should the overseas cues be positive, expect a mild recovery.
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The outlook for the markets today is that of guarded optimism as the near term outlook is that of an oversold market. Should the overseas cues be positive, expect a mild recovery....
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