A Strategy betting on Fall in India VIX | Stocks and Commodities

November 4, 2015
Time: 10 pm

A Strategy betting on Fall in India VIX:

1. Markets are weak ahead of Bihar Exit Poll results.
2. Exit poll results will be out tomorrow evening.
3. There will be a big gap up or gap down on Friday morning.
4. Then during the day also there are a number of companies will declare results like SBI, PNB, BOB, ONGC, BHEL, Tata Motors, M&M, Bosch all Nifty 50 companies.
5. In fact except Coal India all other Nifty 50 companies results will be out by Friday.
6. So my Guess is that India VIX will fall at least by 10% from Thursday closing to Friday closing.
7. How to make money by falling VIX?
8. Here I am giving two ides, let us see how this performs.
9. By 3 pm on Thursday, see where Bank Nifty future trades, round off to the nearest 100, then Sell Put option at 500 points below that level and Sell Call option at 500 points above that level.
10. For example, if Bank Nifty future trades at 17230, then round off figure is 17200, then 500 points below 17200 is 16700, so sell 16700 Put option, 500 above 17200 will be 17700, so sell 17700 Call option.
11. Then see what is the closing price at the end of Friday.
12. Same thing can be done in Nifty by taking 300 points down and 300 points up.
13. If Nifty moves up or down by 100 to 150 points and Bank Nifty by 300 to 400 points, then you do not have to do anything, there will be reasonable profit in just one day.
14. My expectation is that Nifty will not move more than 150 points.
15. But better forecast can be given tomorrow evening after the exit poll results.
16. Tomorrow and day after tomorrow I will write the follow up articles.