by Dilip Shaw
Date: September 14, 2020
In this article I will discuss when to trade Long Straddle and Long Strangle.
When should we trade Long Straddle and Long Strangle?
When the markets are volatile (very volatile) then Long Straddles and Long Strangles work well.
What is Long Straddle trade?
A Long Straddle is a combination of buying a call and buying a put, both with the same strike price and expiration. Together, they produce a position that should profit if the stock makes a big move either up or down. I have written in details about Long Straddle here that you can read. read more
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by Dilip Shaw
Date: September 8, 2020
Today I received an email from one of my subscribers that I believe most of the traders think most of the traders think the same way. So I have shared his email here.
What he believes?
That the stock operators and brokers control the stock market price action. Since they want traders to lose money – most of them play against them and operate the stock in such a way that it almost always hits the stop loss – thus making them money.
However, let me tell you that this is simply not true. Assuming that even if its true, stock price manipulation by any mean other than demand and supply is illegal in India. One day or the other they will get caught and their license will be cancelled. No broker can take a risk with their business license for a few thousands rupees a month. But the main reason is that stock brokers are just that stock brokers, they can help us to get a trade go through, they do not have access to main sources/resources where final transaction between a seller and a buyer is done. Therefore there is no way they can manipulate the prices. read more
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by Dilip Shaw
Date: August 31, 2020
This is INDIA VIX on 31-Aug-20 at 1.19 pm (Source: https://www.google.com/search?q=india+vix):
INDIA VIX 31-Aug-20
INDIA VIX 31-Aug-20
This is NSE on 31-Aug-20 at 1.24 pm Source: https://money.rediff.com/index.html:
NSE 31-AUG-20
Can you see that both are inversely proportional?
Check out this post where I had also given a caution of India VIX surging and NSE falling.
What can you make out from a surging India VIX?
That when India VIX surges NSE will fall and vice versa.
How can this help the directional traders?
Well, this will not help 100% of the times, but if from 11 to 11.45 am you see that India VIX is surging then you can short Nifty futures and if from 11 to 11.45 am you see that India VIX is filling then you can buy Nifty futures. However, this trading must be done Intraday only. Next day the situation can change and you may see the position reversing. read more
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by Dilip Shaw
Date: August 7, 2020
People all over the world do absolutely no planning on how much to invest in stock markets. They just keep investing on gut feelings, as much as possible, to recover losses. This is a poor money management skill. In this article I will help you learn how to properly plan investing in stock markets. This post will help you a lot to plan your investments in future in stock markets, especially if you are young.
Contrary to traditional belief, you do not need too much money to start investing in stock markets but you must know where to invest. In fact it is very important for a beginner not to invest too much money at the very beginning. It is important that you separate the cash that you want to invest in stock markets from what is needed to live a life. Never take a risk with the money you cannot afford to lose. read more
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by Dilip Shaw
Date: August 3, 2020
This article will help you to know how to start investing in stock markets. However there is a very high chance that you already have done mistakes and lost some money. In that case I suggest for now stop trading, learn and then trade.
I have got calls from traders who have lost Rs. 40 lakhs to up to 2 crores. So please do not lose so much money that it becomes hard to recover. Anything above 5 lakh loss is a red sign – you should stop trading here and start learning. I lost a bit more – approx 7 lakhs, but do not want you to lose that much. read more
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by Dilip Shaw
Date: June 1, 2020
The new margin rules for hedged future and options trades coming into effect from 01-June-20 reduced the margin required. It is very good for retail traders, as it reduces the unlimited risk of naked trading.
Here is a detailed very technical explanation by NSE – National Stock Exchange of India Ltd., on the reduced margin framework from 01-June-20:
https://www.theoptioncourse.com/NSE-New-Margin-Framework-01-June-20.pdf
Well, the above file will be a bit complicated to understand. I will try to explain in simple language. read more
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by Dilip Shaw
Date: May 28, 2020
If you do not know on Monday, 20-Apr-20, in the US, Crude Oil FUTURES fell below $0 a barrel to -$40. Yes MINUS $40. So basically the sellers of Crude Oil futures had to become buyers (closing the trades), to get delivery of Crude Oil. So the buyers were actually paying the sellers, to get their hands off the stock they have to keep in their stores, in the US.
What do ‘negative prices’ mean?
You see, oil is produced and kept in stores. This involves cost. Oil producers and sellers make a profit only when it is sold at a higher level than all costs, including such as producing, transporting, storing and labour. Unfortunately, there are no buyers in such a market when the US went on a complete lock-down. So even storing was getting difficult and costly. read more
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by Dilip Shaw
Date: May 13, 2020
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by Dilip Shaw
Date: May 4, 2020
Today May 04, 2020 India VIX has surged 26.42% with a huge fall in NSE.
And here is graph of NSE today (May 04, 2020 at 11.06 am):
Why have I written this article? Just to tell time and again that India VIX is inversely proportional to Indian Stock Markets.
I have written a detailed post here that Nifty and India VIX are inversely proportional.
Why you should see India VIX before taking a trade?
You can gauge the fear factor in the markets. If India VIX has risen anything over 10% then that day is a dangerous day to trade. You have to trade with caution. read more
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by Dilip Shaw
Date: April 6, 2020
Date of post: 06-Apr-20
Since last few days, India VIX is dropping. See this image:
India VIX 03-Apr-20
From a high of 86.63 to 55.30 in less than 30 days.
What does it mean?
It means that traders are assuming that the worst has happened and some kind of normalcy may resume in a few days so fear factor is decreasing.
Does this guarantee that normal trading will resume soon and that Nifty will now start to go up?
Well, nothing is guaranteed in stock markets else everyone would put 100% of what they earn in stock markets. But this gives some indication that in the near future (30 to 60 days) normalcy will resume. read more
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