Oct 172011
 

Nifty(5132): The short-term divergences in the charts are getting more pronounced. This is analogous to an auto mobile continuing on its path without fuel but on residual motion.

Nifty -intraday chart

I can also count a small degree wave 5 that is nearing completion. Volume footprint tells us that the area of 5090 and 5070 is very crucial and might act as the bull-bear divide in the short-term. Since the previous day’s low is just slightly below this level at 5056 that must the stop for those who are long on the market.

Remember, the larger trend is still down as long as the market is still below 5330. With Nifty already near 5200, and significant overhead resistances ahead, the probability that this market will head much higher looks very low. At the same time, a significant decline also seems like a low probability before October 25th . Hence, we will pull a nuetral strategy on the market with the outer-perimeter in mind.

Nuetral Strategy- Bear Strangle:

Write n contract(s) Nov 24th 2011 5200 call at or near 45 and Simultaneously write n contract(s) Nov 24th 2011 4700 put at or near 136.

Margin Required: Aprrox Rs 32000/strangle

Credit Recieved: Aprrox Rs 177

As long as Nifty remains between 4523 and 5377 the strategy will make money.

At October expiry the strategy is likely to yield a profit of Rs 30/strangle – roughly 10% on the margin paid.

 Posted by at 2:45 am

  43 Responses to “India pre market Oct 17th”

  1. Dear Jai,

    Since significant downside may not be there till expirty as per above report, can you give guidance on specific stocks please.
    As you might be aware, the investing commmunity in general must have suffered high losses due to the relentless downtrend in most of the stocks whether large cap or midcap and hence people expect to recover some profits at least during these small rallies even if they are very short term bear market rallies. The sentiment of investors has been so terribly battered that they are willing to take the high risk in trying to gain something at least in such small rallies.

    I do hope you are getting my point.

    Regards
    Desikan

    • Dear Desikan,

      Significant downside probability is low but that does not mean downsides are not possible. Im just keeping the possibility of a crash low.

      Best regards,
      Jai

  2. Hi Jai,

    Do you think even writing Oct 5200 Call around 51 could be a good idea? Or Nov series having more premium content has more juice & chances of a overall profit in %?

    Thanks & Regards,
    Parag

  3. There is some mistake in prices.
    5200 CE trading at 135 (last day close @ 136.6)
    4700 PE trading at 41 (last day close @ 45)

    Total credit could be 177 if the last day prices are met. Correct?

  4. Jai Bala,

    Nov 5200 call at 130 & Nov 4700 put at 40
    Can you please clarify

    -Kishan

  5. Dear Jai,

    Since TCS is near its resistance level of 1145…can we buy 1120 put at Rs 26 pre empting some correction from here.. will it be good strategy

  6. Hi Jai,

    I have gone short in jubilant NOV futures @896. What would be your stand on this please?

    Thank You!

    • Hi Rang,
      It should not cross 938 cash level(And hence that should be your stop) if it does that it stands a good chance of heading lower.

  7. Dear Jai,

    I feel after taking trading subscritption you have gone totally defensive so that your members dont face any loss due to ur recommmd………… but trading is always being speculative and anticipating further move of the market. If people has subscribed to trading then they have to take the risk of potential risk all the time for trading. If u r going to stay on sideline till confirm signals are there then even layman can make money from equity markets !!!!!!!!!!!! which i have been doing since last 5 yrs…. but question is that do we know advance signal of market mood that is the key…… point i am to make is that if you r feeling market is about to do someting in near future as per ur feeliing we shd trade accordingly to make some profit. Give this some thought and we will discuss…

    • Dear Vipan,

      I understand your anxiety and excitement 🙂
      Here is something you might want to think about : When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes

      • I agre with you Jai. One of the rules that you had specified was that your service is not for people who feel a compulsory need to trade everyday. Personally, I would rather be on a strong footing.

        Also the way I look at this, I have bifurcated my portfolio into 2 portions – your calls and my calls 😉

        • I second vivek’s comments…

          • Same here..Even i have divided my portfolio into two parts… one for Intraday which i do on my own and other for positional trades for which i will depend on Jai.. My personal view is that when we are taking a positional view, its always better to be on a surer footing as the potential losses and profits are both on the higher side.

            prateek

  8. Dear Jai,

    Your gut feelings are absolutely correct TCS tanked 7%….

  9. Let us keep the discussion within the members area regarding – real time alerts. Whatsapp would work best since it works across all smartphones. But everyone must have a smartphone. I use Iphone so BBM gets eliminated.

  10. Jai Bala,

    Installed just now (Whats app). If everyone agrees to receive their alerts then it would be a very good.

    -Kishan

  11. HI jai,
    i have been short on jindal steel & power @ 501.00 level when it shot up from 450.00, can u please advice, since i am not all that tech savvy, if i have to go for smart phone which should i opt for? suggestion will help
    regards
    shabbir

  12. Jai,

    Any thoughts on Gold. Have been out of it for some time now. Was wondering if it’s time to enter back by shorting it. . Thanks

    Regards

  13. Dear Kishan,

    Is this application works on Blackberry then i will also install…if jai is going to send the alerts thru them.

    Dear Jai,

    Pls confirm….

    Regards,
    Vipan

    • It does work on BB, I’m already sending it thro Whatsapp for a few who are on it. If all of us can move to it would be quite useful
      Cheers,
      Jai

  14. Sir,

    Just seen ur comments !!!!!!! immed going to install on my mobile 🙂 secondly any new gut feelings about any other companies results ….. i can share mine… may be wrong but lest face it L&T may be positive results …. may be can buy some ATM calls for 21st.

    Regards,
    Vipan

    • Dear Vipan,

      LT structure is such that there is a good possibility of it staying between 1300 (slight exceed allowed) and 1450 before heading lower. So come what may, the chances of it crossing 1450 seems low and in an OUTSTANDING case may be 1510. But the larger structure is down. IF this scenario of this range plays out we will pull one trade here closer to the upper end of the range.

      Cheers,
      Jai

      • Dear Jai,

        My father has a good holding of Larsen and Toubro shares which he has received in ESOP ( Employee stock option scheme ). Can he sell at these levels if you think he may be able to cover it a few hundred rupees below.Please guide.

        Cheers,
        Rahul T

        • Hi Rahul,

          If he would not be sentimental about it, yes he should be able to. Since ESOP’s of our fathers usually come with emotional baggage (from experience :)), you might want to be a bit cautious and try to take a staggered approach on the rise.

          Best regards,
          Jai

          • Hehe

            Very well said and true indeed.The ESOP is his Lifetime hardwork converted to money.But as per you reply to some other post the range from 1450-1510 is what i should look to trim the exposure…

            Regards,
            Rahul Tawde

  15. Dear Jai,

    Can u send one test meg on what app as i have installed the same to check its functionality….. also have u send any advisiory apart from bear strangle…. because i havn’t recd any.

    Regards,
    Vipan

  16. Dear Jai,

    NASDAQ, S&P 500 and RUSSELS, all have given a bullish cross over. Even our NIFTY has bounced back from the lows of yesterday quite strongly. With the festive season round the corner, do you think it will be wise to reconsider our Wipro Short call. Or should we average our position around 360

    Regards
    Prateek Sinha

    • Dear Jai

      i have whatsapp on my phone but havent recieved anything yet from your side.. i m recieving the mails and smses though

    • Dear Prateek,

      It never gives me comfort to average a loser. The alternative is that it takes our stop heads to 375-80 and then comes back for the drop. I think Nasdaq has got a much weaker structure than Dow or the S&P. It looks prone to a sharper and immediate decline than the other indices.

      • Jai

        What i really admire about you is not that you have a great grip of the market, that there might be others as well but what really sets u apart from the rest is your attempt to answer our queries no matter how naive they might be..Your guidance is helping me become a better trader.

        wish you a great future ahead..

        regds
        prateek sinha

        • Hi Prateek,

          Thanks for the kind words. I sincerely hope and wish I make a huge difference in your financial goals.

          Cheers,
          Jai

  17. Anything else posted after this post?

  18. Dear Jai

    With regards to the call on Ambuja Cement buy call, we have a huge supply (resistance) standing @ 160 levels both on daily and weekly charts. A break out above that level will be needed for the stock to head towards our target.

    Awaiting your views on that

    regards
    Prateek Sinha

  19. Jai Bala,

    Do you know any trading journal software?

    -Kishan

    Hey fellas any suggestion?

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