Options Trading Report as on 19/05/2012

We have seen that Indian stock market is trading at 2 year low points. India is facing only problem regarding devaluating rupee and that is lead to increase in inflation rate and slow down in GDP growth rate. In fact these factor are indicating that our finance minister is going to tighten the monetary steps, which might be negative for the market. Because right now it is important to save the Indian rupee in a macro sense. Moreover we are seeing heavy panic selling in the commodity products too. Then there is no matter whether it is gold, silver, lead, zinc, crude, nickel etc. The prices of crude is going down that might be a happy news but on the other hand India is paying crude import money in international currency, that is dollar and which is become costly. So again there will be no positive news of crude going down. , moreover our crude import should be decrease as well as our Indian rupees should be strong. And for that factors out finance minister is going to take some strict measures.

We have seen a very strong re bound from the level of NIFTY 4775. There was a very strong recovery from that point. Which might be an indication that market can turn from the current level? So in near term we can see some positive triggers in nifty. Nifty was even closed on 4900 level which is indicating that it has made some bottom, but with the same thing nifty should trade near the level of 4900 to 5000 for some time, then we can say that it has made some bottom, but for very near term still positive triggers are there for which we can trade. However, our belief for possible rock bottom for nifty is below 4600 level and not before that.

We also believe that rest of the year 2012 is very attractive from investor’s perspective and I think in next six month investors can earn good money. But in 2013 we are going to have election and that will completely change the picture of the industry. So these seven month it will be very interesting. 

If you are are investors then invest only 25 % of your money, If you are speculator then you can go short in nifty with a stop loss of 4980 for short side. If you want to buy then buy nifty with a strict stop loss of 4780 in nifty for the very short term.

All long position in nifty should be cut if nifty trade below 4780 and all short position in nifty should cut if trade above 4980. (all recommendations are subject to daily updates, so please become member of www.meghainvestments.com/subscribe.html  for regular stock trading advice.

Some stock recommendations

Sr No.	Scrip	Cmp	Target price  2012 end	Probable reutrn [in % ]
1	RCOM	65	90	38%
2	GMRINFRA	19.4	27	40%
3	GUJNRECOKE	16	23	45%
4	JSWENERGY	45	58	30%
5	IVRCL	44	60	35%
6	SINTEX	53	70	32%
7	HCC	18	24	33%
8	SUZLON	20	25	30%
9	UNITECH	21.5	28	30%
10	RELCAPITAL	280	364	30%

Nifty is in no trade zone, Indian stock market tried hard to go up. But each try has been laid down by sentiments of the international market. We have seen that everyday market open with positive sentiments and then close with big red mark ticks. Which is indication that speculators are selling in each and every rise of the markets? So it is very risky to be in long side and Bull Run. But at the same time, some of the mid cap stock are looking very attractive. Which are shown above?

Trading strategy for nifty :-

Range of the nifty is seen in the levels of 4750 to 5000                                   

Buy call of nifty 5000 strike price at 38

Sell call of nifty 5100 strike price at 15

Buy put of 4900 strike price at 78

Sell put of nifty 4800 strike price at 43

Premium paid 38 + 78 – 15 – 43 = 58 will be maximum profit

Both side moments covered. Stop loss nifty below 4642 and above 5058

Investors need no tension. If nifty goes up or down they will earn profit.

Trading strategy for bank nifty

To drag down nifty to 4700 to 4800 levels, bank nifty will play big negative role and to increase nifty bank nifty will play a positive role so use below strategy.

Buy call of bank nifty of strike price 9500 at 109

Sell call of bank nifty of strike price 9600 at 80

Sell put of bank nifty of strike price 9100 at 115

No stop loss required. Safe strategy at least no risk for losing money.

Net premium received will be 110 – 80 – 115 = 85.

On expiry profit is sure. As bank nifty will increases 9500 and will give profit and as looking like closes between 9200 to 9500 levels. Premium for 9100 and 9600 will be very low. So again profit.

Pair trade: HPCL & BPCL

We may see a price hike in Petroleum Company very soon. It is must by government. This decision has been delayed by last two months. And Petroleum Company is incurring a big losses and government want to cut the Burdon of the subsidy. So government is going to allow the petroleum company to increase the petrol prices. So either purchase HPCL and BPCL future at any price on Monday. As they both are traded very less in option we can’t give recommendation to buy option for that.

Pair trade: infosys & wipro

Investors can short infosys and buy wipro as infosys are having problems while doing business as well as they are some problem regarding visa of employee. Moreover employees are resigning from the job. So short infosys at …….for the price target of rs 1980 rs in next two month while investors can buy a steady company  like wipro for the price target of rs 430 in next two month. Stop loss for infosys will be 2550 and for wipro it will be 395. Profit is looking sure in this strategy.

HDIL:  REVERSAL BULL PATTERN STRATEGY.

This stock is trading at 50% low of its pick of 130 rs of February May be rebound very fast compare to nifty so following strategy can be used to gain profit. Buy call of hdil of strike price 70 rs at 0.85 and sell call of 75 rs strike price at 0.40 .

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