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Date of article: 23-Mar-2020

Let me first show you last 6 months graph of NSE:

Source: https://money.rediff.com/index.html

On 14-Jan-20, NSE closed at 12362.30, and on 23-Mar-2020 at 12.30 pm it was trading at 7713.80. During this period it has hit two lower circuits. So basically in just last 70 days it has gown down by -37.60%. That is almost 40% of wealth eroded from stock markets in just 70 days.

Where has this money gone? Back to investors bank account. Next time when you hear from media that thousands of crores of investors wealth is lost then do not think that everyone lost money. Fact is even during normal times someone makes and someone loses. Here the story is slightly different. read more

Date of Article: Friday, 28-February-2020

Do not worry over this huge fall in Indian stock markets:

Source: https://money.rediff.com/index.html

India VIX has also shot up by 30.73% – above 20 is dangerous for derivative trading:

Source: https://www.moneycontrol.com/indian-indices/india-vix-36.html

Why This Happened?

It is due to the fear of coronavirus, the markets world over are going through a bad phase.

You can track real-time reported cases of coronavirus all over the world here:
https://infographics.channelnewsasia.com/covid-19/map.html read more

From 1st of May 2020, the margin required to trade will change as per SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/27, Dated: February 24, 2020.

Link here: https://www.sebi.gov.in/legal/circulars/feb-2020/review-of-margin-framework-for-cash-and-derivatives-segments-except-for-commodity-derivatives-segment-_46058.html

Here is a snapshot:

Cash market (intraday) – NO CHANGE in margins.

Option Buy (Naked or Hedged) – NO CHANGE in margins.

Option Sell (Naked) – NOT MUCH CHANGE in margins for Index, but for stocks, the margin will increase. read more

This is copy of email sent to my newsletter subscribers on Feb 26, 2020:

There are many reasons why nifty has become so volatile now-a-days:

1. Too much confusion on CoronaVirus – lots of myth that China is hiding total death count is believed by many people.

2. US-India trade – United States did not announce a trade deal during US President Trump India visit in Feb 2020, not even a mini-deal. Basically, Trump came to just see India – kind of travel with family nothing else.

3. Indian Economics, especially the mid and small scale industries are in tatters and hope is very far. I do not see Nifty crossing 12500 soon. On 26-Feb-2020 Nifty closed at near 11,678. read more

Union Budget 2020 will be presented in the Parliament on February 1, 2020, at 11 am. Till then there will be huge volatility in India markets.

Here are some pointers that can help you make a decision to trade:

1. INDIA VIX will keep increasing

https://www.moneycontrol.com/indian-indices/india-vix-36.html

Currently, INDIA VIX on Jan 17, 2020, is at 11:14 am is at 14.28, up by 0.10 points or 0.71% from the previous close.

It will keep increasing until February 1, 2020. After that it will start to drop. It will take about 10 days for India VIX to be back to normal. Which means by 10-Feb-20 it will be back to normal. read more

Due to the upcoming budget on Feb 1, 2020 and high expectations, Nifty may go up.

Another thing that will go up is – India VIX. From 20-Jan-20 it will start rising and will fall after the budget.

Well, I have written articles on India VIX which you can read here:

https://www.theoptioncourse.com/india-vix-over-17-what-it-means/
https://www.theoptioncourse.com/what-is-india-vix-and-why-it-changes/

What you can do now?

I would suggest reducing the lot size until the budget is over.

Results may be good or bad. If good, you made money – do not regret if you could have made more.
If your trading results are bad at least due to fewer lots traded you will not lose much. read more

For option traders, India VIX is a very important factor that helps to make a decision. It’s a Volatility Index based on the index option prices of NIFTY F&O segment only not any other index like BSE or MCX.

India VIX is a volatility index based on the index option prices of NIFTY. India VIX is computed using the best bid and ask quotes (the difference between quotation of sellers and buyers of options at different strikes) of the out-of-the-money of near and mid-month NIFTY option contracts which are traded on the F&O segment of NSE. India VIX indicates the investor’s perception of the market’s volatility in the near term. The index depicts the expected market volatility over the next 30 calendar days. i.e. higher the India VIX values, higher the expected volatility and vice-versa. read more

Well, it’s important to study what went wrong with every trade you take. And also what went correct with every trade irrespective of the trade made profit or loss. This will give you an idea of what must be done and what must not be done in the next trade. That way with time you become a better trader.

However if you see closely at least 10% of the trades you take must be ignored. Why? Because they were pure speculative trades. Speculative trades are trades that you took just like that because “you thought so”. read more

There are a lot of reasons why you should not take tips from your broker.

Recently I emailed my subscribers asking them the problems they faced while trading. At least 5 people said they were taking tips from their brokers.

When I asked them why the brokers – their reply was that since they know the stock markets better and that they have the ability to move markets.

Here is the the copy of email received:

Dear Sir,

The problems while trading faced by me are:

1) I am a beginner and my broker is not able to provide proper advice, hence losing money. read more

Today morning I got a call from someone who bought Reliance (RIL) Call option a few days back because one of the WhatsApp group he was gave a buy call on Reliance. He bought options worth 37k, and when he called me he was in loss of 20k.

I asked him a few questions which I think you should also ask yourself when you make a trade:

1. What is the logic behind this trade or Why are you taking this trade?

Ans – The answer here is because the WhatsApp admin whom he does not know gave a call to buy RIL. It’s like blind following. Is he Warren Budget that you believed him? read more

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