May 13, 2012

Options Trading Report as on 12/05/2012

We have seen a major correction in the Indian stock market, Due to the government change in France and some uncertainties in European markets. Regarding clarification of GAAR of India, it was a very big positive factor for the market. But market just want a single negative news and react very badly. This is proves that it was predicted earlier. As NIFTY has corrected from 5500 to 4900. It has fallen down 600 points. In percentage terms 11%, where as mid cap stock have fallen up to 50 %. Here are some of those stocks.
Scrip
February
May
Decrease in %
Nifty
5500
4900
-11%
Igl
500
210
-58%
Hdil
120
65
-46%
Suzlon
35
19
-45%
LITL
20
12
-40%
Unitech
35
21
-40%
Sintex
100
58
-42%
Gvkpil
18
11.5
-36%
Delta corp
82
55
-35%
Hcc
27
18
-34%
Relcap
420
280
-34%
Rcom
100
67
-33%
Jsw energy
65
43
-35%
Ivrcl
75
51
-34%
Punj Lloyd
62
43
-30 %
Gmrinfra
30
21
-30%

If market recovers 5 percentages or in points terms, if nifty recovers from 4940 to 5200, we might see the recovery in this stock more then 50 of the above fall of the market. so from 4940 level chances of going down is 35 % and chances to go up to level of 5100 is 45 and 20 % will be at the same level in the month may.
We are seeing a very heavy continues selling from FII’S. they are changing the direction of the market.. Another reason is from Europe but it is going to calm down. But we will not see immediate recovery, but at least selling will be either low or stopped. So it is a good time for buying in fundamentally strong company. Moreover in 2009 nifty recover from 4950 level. And in 2010 nifty increases from 4980 level and in 2012 also nifty is getting a support from the level of 4950. So it is becoming a last support of nifty which is very strong and nifty should trade in the range of 4950 to 5100 for the month of may

Midly bullish strategy of nifty
Buy nifty call of strike price 5000 at  63
Sell  nifty call of strike price 5100 at 31
Buy nifty put of strike price 4900 at 85
Sell nifty put of 4800  at 53
Total premium paid will be 63 + 85 – 31 – 53 = 63 * lot size 50 = 3150
No stopp loss requires as we are seeing a trading range of 4900 to 5100. At both place investor will earn the money.

Trading strategy for bank nifty :-
Bank nifty is showing some kind of resistant at the current level. So it will be the buying opportunity for the trader. They just can buy at current level for the target of 9800 to 10100 for the may expiry.
Buy bank nifty at current level or use below strategy
Buy call of bank nifty of 9600 strike price at 140   
Sell call of bank nifty of 9700 strike price at 110
Buy put of 9200 strike price 162
Sell put of 9100 strike price around 135
No stop loss is required as strategy covered for both of the trend.
Maximum risk will be net premium paid = 140 + 162 – 110 – 135 = 57 * 25 = 1425
Reward will be un limited. low risk and high return



Buy infra and contruction stock or use below strategy.
Buy Hdil call 70 strike price at 1.90
Unitech call 22.5 strike price at  0.65
Both stock has been crushed from its recent high 35 %
So we might see a recovey of 10 % in two weeks.
Total risk is very low [1.90 * 2000 = 3800 + 8000 * 0.65 = 5200] = 9000
Target for hdil call = 5 rs
Target for unitech call is = 1.25rs
Maximum possible return would be 10000 + 10000 = 20000
So investment around 9000 profit could be around 11000
Might gives profit more then 100 % in one week

Pair trade power sector :
Rel power 100 strike price call at 1.90
Tata power 100 strike price call 1 rs         
Total investment is [1.90 * 2000 = 3800 + 4000 * 1 = 4000 ]= 7800
Target for both stock is rpower 4.5 rs , tata power 3 rs
Maximum profit 4.5*2000 = 9000 + 4000 * 3 = 12000 = 21000
Investment 7800
Return possible 21000
Risk reward ration is very much favorable

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Posted on Sunday, May 13, 2012 | Categories: