Our markets opened gap up following global cues and also as crude cooled, after Fed leaving rates unchanged, as anticipated. Exactly 100DSMA proved to be a strong supply zone on both the indices, where selling was noticed, more than twice intraday, finally in a volatile trade, indices have closed with marginal gains. Bull unloading and profit booking by small and retail players was visible as indices have already rallied more than 21% from the lows of 2008 made on 16.07.2008. Now the 100DSMA is to be watched keenly, for clues on furtherance of the rally! Crude continues to fall on the strengthening of the dollar, and also due to the fear that the higher prices are forcing lower consumption of the commodity globally. US markets were volatile overnight, but finally closed in positive territory. VIX has closed at 34.92. CBOE index has closed at 20 in US indicating lesser volatility for now.
Nifty futures have closed at premium of 8 points as against 25 points previous day indicates positive bias, after profit booking. The news flow domestically is also positive, as RBI clears the introduction of currency(dollar-rupee) futures trading on bourses, introduction of ETFs allowing individuals too participate is welcome measure. NHPC files DRP for IPO with SEBI. Today's inflation data if doesnot show any ugly raise, devoid of any major news during the month, indices might consolidate in sideways between 4400 to 4600 today. Please note that Nifty closed above 4500 for two successive days after 20.06.2008, when it broke this level to seek lower levels, is an important pivot for bulls to take the new found initiative forward. If Nifty can close above 4500 this week then the trading range will once again shift to 4500 to 5000 band, which will be a bullish sign. Failing which, Nifty shall again seek lower levels to 4332 first and then 4224 later next week, as it would be shortened trading, due to Independence Day holiday on August,15th for our markets. Asian markets are trading mixed and Singapore Nifty Futures are currently quoting flat with 1 point discount, thus, we can expect sideways movement today in our markets.
Range for the Day: Nifty might trade in the range of 4450 to 4650 today.
Strategy for the Day: Buy 4400 calls on weakness and 4600 puts on rallies for intraday trading.
6 comments:
i have a query .
If we sell option , can we square it off the same way during the month as is the case in the buy mode . Or one has to wait for expiry ?
Rahul
Dear Rahul,
Index options (Nifty) are European Model, which will be exercised on the settlement day. However, one can square off at market price on any day.
Buying option requires payment of premium only, where as selling requires span and var margin too.
bkvrkrao
Thanks for the reply . Was concerned that in order to take advantage of high premium as suggested in one of the posts would one have to wait till expiry ?
To clearify my understanding pls confirm the below example -
Sell nifty put option on 01 Aug at 300 (Hypothetical)
On 7th Aug if the price is 150 , I can sqaure it off and book profit ?
Rahul
Dear Rahul,
In the example cited by you, u can square off and book profit perfectly. Need not wait till expiry.
bkvrkrao
which broker are you using and which you consider best for options?
I am currently trading on ICICI . But I face hell lot of problems with them . Shall switch over shortly after studying which one would be better .
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