December 1, 2017
Time: 8.30 am
November series:
November series started around 10350, shot up to about 10500, then came down to 10100 and again shot up to 10400 and again fell to close around 10225.
It was a roller coaster ride in November.
Moody upgraded India in November, despite that Nifty closed about 125 points lower in November.
Almost the entire fall was just in 30 minutes yesterday. Fiscal deficit figure triggered panic selling in the last half an hour yesterday.
July series closed around 10150 and then for the next four months Nifty has been in the consolidation mode.
In the first 7 months, Nifty was up by more than 2000 points, in the next four months it is not even up by 100 points.
This long consolidation can not continue infinitely.
But when there is going to be a breakout? What is going to be the trigger?
They are billion dollar questions.
Whether market will breakout in December series? Whether Gujarat and HP election results will be the trigger?
It is anybody's guess.
December series:
December series begins with the expectation that Nifty will be trading between 10000 and 10500.
Nifty 10000PE has the highest open interest among Puts.
Nifty 10500CE has the highest open interest among Calls.
Though I am not a firm believer of open interest in the first half of the series, we have to work with some guideline, so I am taking this point.
December will see a lot of action, GDP data, RBI policy, Election results, US Tax cut progress, Fed policy, etc.
In addition, other usual data like monthly auto sales data, Manufacturing PMI, Service PMI, US jobs data, IIP data, CPI inflation and WPI Inflation data, etc.
Yesterday GDP data came at 6.3% which is slightly lower than the expectation.
But the good news is that if we remove Agriculture and Govt. spending, then it is 6.8%.
So private sector is surely picking up after Demonetisation and GST blues.
Stock market is all about private sector performance.
Today's Trade:
US markets shot up.
But today morning there is some problem with US Tax cut proposal.
So Asian markets are are following US markets.
SGX Nifty is swinging widely between 10250 and 10295.
Adding to the negativity, China Manufacturing PMI came lower than expected.
So China and Hong Kong are down.
We can expect Nifty future to take support at 10220.
Resistance may come at 10340.
Strategies:
Due to Gujarat elections, India VIX is likely to shoot up in the next two weeks.
Nifty will move 200 to 400 points either way depending on the election results.
So I am planning to play only Bank Nifty weekly options that will expire before December 18.
Close to December 18, when India VIX shoots up, I am planning to buy Nifty put option 200 points OTM and sell double the quantity of 400 points OTM. Similarly I will buy 200 points OTM Call option and sell double the quantity of 400 points OTM Call.
I am not giving the Nifty levels as we do not know where the Nifty will be trading closer to December 18.
We need to create this strategy between December 10 and December 15, by that time, all usual data will be out and will be factored in.
Follow up:
Earlier in November I bought December Nifty 10200PE and sold double the quantity of 10000PE.
That has come to Delta neutral yesterday.
Either I can close the positions or can just leave it if I do not need the margin.
Closer to Election results, I am planning to shift this positions to January series.
Time: 8.30 am
November series:
November series started around 10350, shot up to about 10500, then came down to 10100 and again shot up to 10400 and again fell to close around 10225.
It was a roller coaster ride in November.
Moody upgraded India in November, despite that Nifty closed about 125 points lower in November.
Almost the entire fall was just in 30 minutes yesterday. Fiscal deficit figure triggered panic selling in the last half an hour yesterday.
July series closed around 10150 and then for the next four months Nifty has been in the consolidation mode.
In the first 7 months, Nifty was up by more than 2000 points, in the next four months it is not even up by 100 points.
This long consolidation can not continue infinitely.
But when there is going to be a breakout? What is going to be the trigger?
They are billion dollar questions.
Whether market will breakout in December series? Whether Gujarat and HP election results will be the trigger?
It is anybody's guess.
December series:
December series begins with the expectation that Nifty will be trading between 10000 and 10500.
Nifty 10000PE has the highest open interest among Puts.
Nifty 10500CE has the highest open interest among Calls.
Though I am not a firm believer of open interest in the first half of the series, we have to work with some guideline, so I am taking this point.
December will see a lot of action, GDP data, RBI policy, Election results, US Tax cut progress, Fed policy, etc.
In addition, other usual data like monthly auto sales data, Manufacturing PMI, Service PMI, US jobs data, IIP data, CPI inflation and WPI Inflation data, etc.
Yesterday GDP data came at 6.3% which is slightly lower than the expectation.
But the good news is that if we remove Agriculture and Govt. spending, then it is 6.8%.
So private sector is surely picking up after Demonetisation and GST blues.
Stock market is all about private sector performance.
Today's Trade:
US markets shot up.
But today morning there is some problem with US Tax cut proposal.
So Asian markets are are following US markets.
SGX Nifty is swinging widely between 10250 and 10295.
Adding to the negativity, China Manufacturing PMI came lower than expected.
So China and Hong Kong are down.
We can expect Nifty future to take support at 10220.
Resistance may come at 10340.
Strategies:
Due to Gujarat elections, India VIX is likely to shoot up in the next two weeks.
Nifty will move 200 to 400 points either way depending on the election results.
So I am planning to play only Bank Nifty weekly options that will expire before December 18.
Close to December 18, when India VIX shoots up, I am planning to buy Nifty put option 200 points OTM and sell double the quantity of 400 points OTM. Similarly I will buy 200 points OTM Call option and sell double the quantity of 400 points OTM Call.
I am not giving the Nifty levels as we do not know where the Nifty will be trading closer to December 18.
We need to create this strategy between December 10 and December 15, by that time, all usual data will be out and will be factored in.
Follow up:
Earlier in November I bought December Nifty 10200PE and sold double the quantity of 10000PE.
That has come to Delta neutral yesterday.
Either I can close the positions or can just leave it if I do not need the margin.
Closer to Election results, I am planning to shift this positions to January series.
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