Near Bhuj, Kutch, India
14 Thursday Jun 2012
Posted Uncategorized
in14 Thursday Jun 2012
Posted Uncategorized
in03 Sunday Jun 2012
Posted Uncategorized
in21 Monday Dec 2009
Posted India, Indian Stock Market, NIFTY, Option Selling, Option Writing, Stock, Stock Market, Stocks
inTags
If you a trader , then at one or other time you have heard or even considered Option Selling(Or option writing). But every time you have tried to talk about option writing , you were scared off by your broker, friend or other message board poster telling you, the ignorant, about “unlimited risk” in option selling. Instead, you were perhaps recommended to buy options, if at all you want to trade in options at first place, as it carries limited risk of the premium you pay.
However, after trying to trade in future and losing more money than I made profits I am now trying trade in option selling. Ofcourse, it has theoretical unlimited risk. But as in theory, an option buyer has prospect of unlimited profit, but in real he never has unlimited profit. Similiarly option writer does not have to face unlimited risk, specially with suitable risk management method applied in option selling.
As in future trade, when the trade goes against you , its upto you to when to square off your trade considering your risk appetite (Future trade has also unlimited risk, if you dont cotrol it). Similarly in option selling you can decide your risk management method and strictly adhere to it.
In option buying your odd to win is 1:3. Suppose you are bullish on a stock, therefore you bet on it, but the stock may go up as you guessed, go down or remain flat. Moreover, possibly you are good at technical analysis and got clue from the chart and guesses correct direction of the stock, but there are still chances that the stock may go in your desired direction, but at the same time it may not reach at the price where your trade becomes profitable.
In option selling you dont have to worry about guessing precise direction and level of a stock or index. You have to see the broad range of movement of a stock/index on both side. Then you may want to check the volatility of given stock or index, which will give you broad idea of volatility in coming days.
Other thing about the option selling, particularly in the given environment of Indian stock market, where far months contracts (except NIFTY with somewhat liquid contracts) are not liquid enough to trade. Therefore most trades are available is of near month. On account of only-liquid near month contracts, premium is often low and therefore income is generated through option selling would be comparatively low.
One of the most important aspect of option selling is risk management, dont trade in option selling unless you have planned how to tackle loss/risk. Ordinary you can define your risk appetite for each trade. You can decided how much amount of loss you are ready and can bear on each trade if the trade goes wrong.
I choose another kind of risk management, as I do not want lose any of my capital. I prefer to sell call and put far from the spot price and collect premiums from both the side. Obviously market will go , if it does, in one direction in such time I use premium collected from other side as buffer. If premium price equals to the premium collected from both side, I would square off my position.
In beginning of this month I have opened following positions by selling calls and puts as under :
TATASTEEL CALL 640 @ Rs.5.70
TATASTEEL PUT 470 @ Rs.3.00
SUZLON PUT 60 @ Rs. 00.75
SUZLON PUT 65 @ Rs. 00.90
NIFTY CALL 5400 @ Rs.22-50
NIFTY PUT 4700 @ Rs.22-00
NIFTY CALL 5300 @ Rs.36-00
NIFTY PUT 4800 @ Rs.31-00
I have collected around 16,000-00 this month, and as the market is trading in very narrow range, most of , almost all, option would expire worthless, and I will keep the premium.
Please note, this is not advice or recommendation to start option selling. You can find various educational material on the net about option and option selling. Do at your with your own understanding at risk.
22 Monday Dec 2008
Posted India
inThe abovesaid image is from from 2008, the year in photographs (part 3 of 3)
24 Friday Oct 2008
Posted Equity, Indian Stock Market, Stock Market, Thoughts, Uncategorized
inTags
Equity, Indian Stock Market, Investment, long term, NIFTY, PANIC
If you have entered in the Indian stock market anywhere during the recent bull run (2003-2007) , you are witness of one of the biggest bull run for Indian stock market. Now you are witnessing the worst performance of the markets. Each day , each week is worse than the previous.
Today NIFTY/Sensex made its biggest single day loss nearly touching November 2005 lows. This week is worst performing week. Reliance touched 990, losing nearly 18% in one day, shivering the entire market and players. Unitech lost 50 % , 30 Rs., in one day.
No analyst/market ,local or global, expert had anticipated such fall, the fall is simply unprecedented , just like the last bull market.
Dow Jones future is in 550 points down, and is not falling further because of the bottom is restricted by the regulators. US market is also expecting worst trading day. UK has gone in recession technically on account of negative GDP data published today.
Anybody who has entered into market during 2005 and holding any scrips of that level is also in loss also.
I recall headlines of magazine/news papers during 2003-04 about the bull run in stocks and gold (also in real estate) at the same time. It was pleasant surprise , as generally gold and equity always meet at cross road , one is rising when other is going down. Now the same thing is being repeated gold and equity both are going down as gold has touched one year low and at 684 USD.
Panic is everywhere, and panic has become so routine that newspapers/television channels have stopped taking note in its headlines.
However, such fanatic fall can be compared with equally fanatic rise in the market. During the bull run I recall the cheers at every 1000 mark achieved by Sensex some time in a single day. Now the fall is also mimicking the trend, but that sounds good. The rise was much more than fair values on account of GREED, and therefore the fall gollowed. But now the fall is also appear much below than the fair values on account of FEAR.
Today will be unforgettable (?!) day in the history of equity market all over the world, unless worse is still to come.
Will talk more in next post.
08 Wednesday Oct 2008
Posted Equity, India, Indian Stock Market, Investment, Stock Market
inTags
Today , when the market opened I saw Mercator Lines (MLL) at around38-39 and thought to add little in the bulk. So, I called my broker for placing the order, he symptomatically alerted me, “be careful, now it is bear market ahead”. I smiled myself and thought now the fact has been realized to the lowest level.
Ordinarily, brokers rarely advise you ‘not to buy’, not because they are losing commissions , but morely because it is our decisions to do so. But when a broker whispers about bear market, it is clear that ‘the last bull’ also has lost confidence in the market.
So, what will happen next? The valuations of all companies become zero? They will become bankrupt? Civilisation will extinct?
The answer is, after all these ‘Fear Factors’ , things will become normal- people will again find valuations attractive in the same companies for which there were no buyers in the days of panics.- Again some people will buy selected scripts- again they will become optimistic about the growth of economy- and they will buy some more- and that will increase stock prices- that will alert some other investors about the rising prices of shares, so they will try to get into the market expecting good return- that will also cause rise in prices of shares- by now Televisions and newspapers will take notice and make headlines about unusual price rise of share prices- which will create ‘Greed Factors’ among the mass…. and you know what will happen next.
It is correctly said that we have learnt from history that men never learn from history. So, till the human beings are there with there primitive emotions of fear and greed, bull and bear market will survive.
02 Friday May 2008
Posted Bombay Stock Exchange, Business, Equity, India, Indian Stock Market, Investment, Sensex, Shares, Stock, Stock Market, Uncategorized
inEveryone is toying with the question. The market seems to have arrived at cross road and most experts are hopelessly divided about the direction where the market will head, and I am not expert at any technical analysis but I too have my opinion 🙂
I recall reading somewhere (do not recall the source, please share if some knows) that historically is is seen that once market corrects it takes 91 days to begin recovery phase.
Around 10-04-2008 Nifty showed first fall and continued, with 2-3 bounce back. Intermediate bounce backs lasted for 2-3 trading days but the trend was downwards. Around 09-04-2008 recovery started which continued for 7 session, then two insignificant days of profit booking and then the trend continued upward. Perhaps, this can be sign of beginning of recovery phase and the market has swing up after showing the bottom. The market was not fettered by any negative news during while making continuous uptrend which is good sign.
If one compares the chart of previous fall of 11-05-2006, which also showed recovery around 09-08-2006 (approximate 91 days) and then the trend was continued.
RSI (Relative Strength Index) of both the charts are strikingly similar going towards 70 , and should remain around that level (in the recovery of August 2006, RSI constantly remained around 70 till first week of December’06).
MACD (Moving Average Convergence/Divergence (MACD) in both the charts are moving above 0 (turning positive) with the positive histogram. After August-2006 correction MACD line remained consistently near 65 till 08-12-06.
Only CMF (Chaikin Money Flow) indicator shows some worrying sign. During May-August’06 recovery, CMF showed consistent accumulation during previous two months (July-Aug’06) of the recovery phase. However presently CMF is not conclusive at all and indicator is withered showing confusion among the market players.
Technical analysis , however, does not consider any external factors and merely base the analysis on the chart patterns. Thus the chart pattern shows bullish sign, but one has to wait for confirmation of bull market.
However, in US according Dow theory, the market has confirmed bullish signal as both the index (Dow Jones and Transportation) have arrived at confirming the bull signals around 18-04-2008 (Read following articles for Dow bullish signal).
http://www.internetnews.com/bus-news/article.php/3741971
http://www.fool.com/investing/general/2008/04/21/thanks-a-lot-dow-theory.aspx
http://www.forbes.com/personalfinance/2008/05/01/allocation-diversification-…
09 Wednesday Apr 2008
This article at techtree.com reminded me to write me about this incident.
I have been subscriber of India Today Book Club for last 3 years and has purchased a good amount of books from ITBC. But recently I received a parcel through VPP and as it was from ITBC I paid for the parcel. What I found in the parcels was a set of cheap CD-ROMs which I did not recall ordering.
Next month I again got same parcel and I was not present and someone inadvertently received the parcel and paid for the same. Again the same set of CD-ROMs was in it. Then I received a call from my neighbor who had received similar parcel, but wisely he did not pay and asked me first about the contents of the parcel. I told him to refuse to receive the said parcel.
Thereafter, I wrote to ITBC and not to sent any book unless I place order. Though I my subscription is about to expire and I do not intend to extend considering such incidents.
25 Friday Jan 2008
Posted Bombay Stock Exchange, Indian Stock Market, Investment, Sensex, Shares, Stock, Stock Market
inTags
BSE, Bullish, Chart, Equity, Future Prospect, graph, Growth, India, Investment, NSE, RSI, Stock Market
Well, no one is sure about it. But after the historical massacres on 21st and 22nd January ,which shaken all the trust and confidence of the investors, it was difficult to hope for a recovery.
The recovery seems arrived sooner than expected. Today ,not unlike Monday and Tuesday, the Bombay Sensitive index made another historical record ,in a pleasant way , by the way of gaining about 1140 points (6.62%) in a single day.
Technical analyst were expecting a bounce back. During mid January’08, RSI (Relative Strength Index) indicated overbought situation and also showed negative divergence. Therefore, some sliding towards the centerline was expected. However, the sudden huge slide for two consecutive days brought the market in oversold situation. After today’s rise, RSI indicates positive divergence, hardly keeping the nose above water,at around 35.
So, looking to the buoyancy displayed by the market, bull run seems in order , of course, subject to the global cues and other factors.
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21 Monday Jan 2008
Posted Bombay Stock Exchange, Business, Equity, India, Indian Stock Market, Reliance, Reliance Petro, Sensex, Shares, Stock, Stock Market, Stocks
inThe market has been sliding since 8th January, and today it was the biggest slide of the In the history of Indian share markets.
***
Here are the 10 biggest falls in the Indian stock market history:(rediff.com)Jan 21, 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17,605.40 after it tumbled to the day’s low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.
May 18, 2006: The Sensex registered a fall of 826 points (6.76 per cent) to close at 11,391, following heavy selling by FIIs, retail investors and a weakness in global markets. The Nifty crashed by 496.50 points (8.70%) points to close at 5,208.80 points.
December 17, 2007: A heavy bout of selling in the late noon deals saw the index plunge to a low of 19,177 – down 856 points from the day’s open. The Sensex finally ended with a huge loss of 769 points (3.8%) at 19,261. The NSE Nifty ended at 5,777, down 271 points.
October 18, 2007: Profit-taking in noon trades saw the index pare gains and slip into negative zone. The intensity of selling increased towards the closing bell, and the index tumbled all the way to a low of 17,771 – down 1,428 points from the day’s high. The Sensex finally ended with a hefty loss of 717 points (3.8%) at 17,998. The Nifty lost 208 points to close at 5,351.
January 18, 2008: Unabated selling in the last one hour of trade saw the index tumble to a low of 18,930 – down 786 points from the day’s high. The Sensex finally ended with a hefty loss of 687 points (3.5%) at 19,014. The index thus shed 8.7% (1,813 points) during the week. The NSE Nifty plunged 3.5% (208 points) to 5,705.
November 21, 2007: Mirroring weakness in other Asian markets, the Sensex saw relentless selling. The index tumbled to a low of 18,515 – down 766 points from the previous close. The Sensex finally ended with a loss of 678 points at 18,603. The Nifty lost 220 points to close at 5,561.
August 16, 2007: The Sensex, after languishing over 500 points lower for most of the trading sesion, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358.
April 02, 2007: The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617 points (4.7%) at 12,455.
August 01, 2007: The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a hefty loss of 615 points at 14,936. The NSE Nifty ended at 4,346, down 183 points. This is the third biggest loss in absolute terms for the index.
April 28, 1992: The Sensex registered a fall of 570 points (12.77 per cent) to close at 3,870, following the coming to light of the Harshad Mehta securities scam.
***
Perhaps, this can be good buying opportunity. But , then again nobody knows where this market will end up. I have been buying scrips in small quantity but prices are falling like brick.
Ambani brothers seemed to suffered most in the single day. Today, Reliance Natural (RNRL) came down with landslide of 23% at 157. Reliance Petro (RPL) also slided 17% ending at 171. Reliance Capital also lost 20% and closed at 1884. Reliance Communication lost 12% and closed at 613. Reliance Industry (RIL), the flagship of Mukesh Ambani group, also lost 9% closed at 2540.
Many liquid shares have lost more than 25% in one week. Essar Oil lost 31% in single day. TTML has lost 40 % in 10 days , from highs of 65 now it is sitting at 40. Mercator Lines (MLL) touched 186 10 days ago and today it closed at 120 and that too because of restricted lower circuit of 5%.
Analysts and experts are also shocked as such nasty fall was unexpected, and there are many reasons to ponder why this market fall. They also expect to market fall further 10-15 % but also not pessimistic about the bull run in long term.
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