An unheard limerick, coined by yours truly, till some claim is authenticated on the same, roposes the current scenario and the base reasons for the same vacillating non volatility trade winning 6200 mark again. We had planned a kudos for the F&O analyst for proposing the 6100-6300 straddle ( Sold put – sold call) after Vol (India Vix) reported a low 15-17 score befor the weekend and 17 on Thursday. Though the Economic data is baked in however, the index challenged by us to stay the course around 6200, is finally hanging on to its gains after some again ventured freely on the shorts ( even the short straddle is a double short but bets the markets are ranged in 6100-6300. If the markets indeed die at 6200 the strategy would be a magic marker for the India F&O market that will be a good point of reference to repeat in any new intermediate cycle or waiting time as the case may be. However as of now, the strategy is a little stuck in the mud. Also when switching this strategy in a bull market currently, one can even sell twice the 6200 puts as the never yet suggested bull exit indeed comes to fruition
Long Straddles won the day marginally(Long 6100 call, Long 6300 Put) and Sold 6200 calls are also in the money over the weekend( Open-Open comparisons) The 6300 Call has come down from 270 to 30 from last Monday (Open – Open) though OI has decreased in the market after a hopeful Friday Ramp by a 3/13 ratio and sold calls would have generated
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” GAIN ”
INR 24,000 per 2 lots (100 Nifty underlying) as vol has disappeared from intra trend highs and turnover is steady though considerably lower than the bunched OI at 6200. A 6100-6300 short straddle would have gained 1300/- from Friday Open to Monday Open with the 6100 Put losing 700/- [All calculations made at the same 2 lots = 100 Nifty underlying each leg of the straddle]. A long 6100CE/6300PE straddle would bother an INR 26.1K investment and would have been worth INR 23.4 K on Monday morning.
Good volumes have been traded in Havell ( as the Morning report comes to you late today for unspecified reasons) as the scrip gets select attention. Similarly NB, PFC and other select universe scrips have seen important moves from Friday levels upwards even as Nifty Calls seem to specify maturity of the short Calls especially at 6100 (still at a premium above 100)
The Rupee closed at 61.75 on Friday and is a t similar levels in Monday afternoon trades and both banks and infracos have seen significant moves after a 25bp rate hike has been priced in by the markets at 8.9% yields as the Bond Index entry for India issues is also under review
The Tech M sale announced last week as Executive (insider sales) Vineet Nayyar, exited half his shares ( Sale of 500,000 shares) timed perfectly with the peak price for the stock and as we expect bigger shorts in the scrip , one should expect the longs on IT to continue iling into the doddering scrip nevertheless.
The Title reference, to dig into the simile, shows up the underlying insane spells in the India markets, showing u more in skeletal volumes and defining why retail and even Domestic institutions have been priced out of this market..I am still to design any research around such a proposition, but it is likely not difficult. Let me know if any of you try.
Tomorrow might be much the same after a second day that the Market opened near 6200 and returned to 6150 before closing trades were executed. HDFC Bank has hit a 49% foreign investor ceiling nd is losing purely for lack o f allowed buyers today. PSU Bank investors will not be returning for a significant part of 2014.
- India Morning Report: Nifty switches up range to 6100-6300, Is 6200 on the horizon (awardz.wordpress.com)
- Daily Stock Derivative Report 13 December (marketresearchtips4u.wordpress.com)
- India Morning Report: I wonder if this freewheeling, Really is an enlightening thing (Dubious , Vikram Seth, NDTV 2013-12-14) (awardz.wordpress.com)
- India Morning Report: Nifty treads lightly as shorts disappear (Priced to 6300+ levels ) (awardz.wordpress.com)
- India Morning Report: Another US FDA bird hit, US GDP caught with high inventories, Markets broadening base (awardz.wordpress.com)
- India Morning Report: Don’t fall for that downtick again – Nifty keeping gains (awardz.wordpress.com)