Pre Market Report, September 21, 2018 | Stocks and Commodities

September 21, 2018
Time: 9.25 am

Pre Market Report:

1. Last Wednesday, I thought Nifty future would take support at 11280.
2. But that level was broken and Nifty future broke the last weeks low.
3. Hence Nifty future made the swing low and recovered little bit to close around 11270.
4. After our markets closed at 3.30 pm, RBI aggressively sold US$ and Rupee appreciated.
5. Later US$ also fell and Rupee quoted around 71.75 in overseas markets against the close around Rs 73 here.
6. Hence SGX Nifty shot up by about 50 points on Wednesday night itself.
7. Then came Trump's comment about Crude prices.
8. Trump's announcement is very important as Crude is nearing multi year high of US$80.
9. Yesterday most markets were up and US markets made all time high.
10. So SGX Nifty shot up further 50 points taking the likely gap up by 100 points.
11. But now SGX Nifty is trading around 11350, about 80 points higher.
12. But not everything is good.
13. (i) Crude prices did not fall significantly after Trump's announcement. (ii) Even after such a big gap up, Nifty future may not even cross Wednesday's high. (iii) Yes Bank will make sure that Bank Nifty does not rise proportionally. 
14. Yes Bank and Jet Airways will be in trouble.
15. There is a significant premium of about 45 points in Nifty future which may come down as there are only few more trading sessions left.
16. But my November 11500 Straddle will do very well.
17. India VIX may crash and Option premiums may collapse both on the Call side and Put side.
18. In fact even after about 45 points fall in Nifty, Put option premiums did not increase.
19. Just to protect my long positions, I bought 11300PE and sold slightly more than 2X 11150PE to collect the same premium.
20. So I am protected from 11300 to 11150 without any cost.
21. Short strangle at 11200 and 11500 may be a good idea. You should know how to firefight if things go wrong.
22. Nifty future may trade between 11320 and 11420.