Analysis and Trade Plan - 27 August 2019

  • Only 2 more days for August 2019 expiry and we seem like forming a bottom at 11000.

  • Nifty futures witnessed Long Buildup yesterday. Bank Nifty futures witnessed short covering despite a rally of more than 1000 points.

  • Bull Put Spread, Bear Call Spreads used to be my favorite bullish and bearish strategies, until uncertainty dropped and it started hitting stoploss.

  • I looked into Calendars and they were widely successful. Calendars were so good that I can manage them if they went against me. I can manage them, if they went in my favor.

  • Strangles used to be a go to strategy for profits, unless you have a rally of 1000 points in a single direction. To adjust this kind of movement, I discovered a way to profit from this situation too now. Adversity brings out the best in traders if you are willing to apply your mind.

  • PCR for Nifty is mildly bullish at 1.11 with Max Pain steady at 11000. For Bank Nifty, Max pain started to rise with PCR at 1.12. One day of max pain rise cannot be attributed to a sudden change in direction.

  • On Nifty, double the amount of puts were written as compared to calls. While on Bank Nifty, double the amount of calls were written if we look at the total OI change. This can be false data as we were at bottom and amount of calls written on top were always going to be more. If we compare the immediate 10 OTM strike, then PCR is at 0.95 and suggest a sideways movement.

  • We are in bearish trend for a long time and suddenly the domestic news has made market positive. We need more data to confirm if the upmove will sustain or not.

  • SGX Nifty is hinting at a positive start of around 30 points. Bank Nifty can open up with 100+ point gapup.

  • Donald Trump again started positive talk on Trade War with China and that lifted the US stock market yesterday.

  • RBI agreed to pay dividends of 1.7 lakh crore to government which will help maintain the fiscal deficit.

  • Yesterday when market was around 26600, I did not expect Bank Nifty to surge another 300 points and hence I kept holding to my 2800 CE. But later it seemed that market currently due to short covering and sentiment is ultra bearish, it was a challenge to save the positions. And so I sold 28000 puts of equal quantity. I took a premium of 380 and expecting a bullish sideways market my breakeven is 27620 -28380. To manage this position, I might write some additional calls if we go out of this range.

  • I am travelling these days so my blog posts are late and will continue to be late for some days.

I have updated the open positions in the sheet:

23 August 2019 - 29 August 2019.xlsx


Rohit Katwal

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