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Note: Extract from my newsletter sent yesterday. Please register your email here if you like to receive such newsletters. You will also receive a free 5 days course on options.
Yesterday (30-Nov-2015) evening I had emailed my subscribers this:
INDIA VIX today closed at 16.43.
It could increase before the announcement of RBI Policy tomorrow at 11 am sharp.
I assume it will drop after that.
What can you trade tomorrow?
If you have taken my course trade Strategy 1 BEFORE the announcement is made at 11 am – NOT after.
If you are already in Strategy 1 – please see if you are getting reasonable profits at around 1 pm. If yes close your positions and book profits. VIX would have dropped and index stable. Great time to take profits out.
Enter again when VIX increases. Looks like 17 is the best to enter. But there is no need to keep waiting. There are no major news at least for the next 15-20 days – so it looks like VIX will be more or less in a range 15-17. So any day you see a spike, enter Strategy 1 again.
If you are an Intraday trader – SELL ATM (at the money) options (both calls and puts at 9.30 am) and book profits end of day or if Nifty moves 1% from the time the options were sold (this is actually stop-loss in profits). Do not sell after 11 am tomorrow.
A 1% move will NOT damage the positions – VIX drop means you will still be in profits.
========== End of Email ==========
Why I asked to sell options before 11 am today?
The reason is this that VIX will be high before the announcement is made and after that it will fall. Sellers can make quick profits trading Intraday.
As you can see VIX today opened at 16.43 – same as yesterdays close – but at the time of writing has dropped significantly.
All Intraday option buyers will lose money today as I do not expect huge movement after this news.
And remember – options buyers, especially the short-term ones or Intraday traders, get very active on these days as they expect huge movements. When nothing happens they close their positions in losses. Sometimes even when the move comes – they still lose money because of the drop in Volatility which leaves them confused as to why they lost money even when Nifty moved in their direction.
Well now you know why. 🙂
Why There Will Not Be Huge Movement?
That is because what happened was expected anyway and now the traders DO NOT know whether to buy or to sell and that could be stocks/options/futures whatever. In situations like these there is going to be a balance and markets will not go anywhere ensuring losses for the buyers.
In today’s case the markets expected no rate cut and exactly that happened. Reserve Bank Governor Raghuram Rajan held repo rate steady at 6.75 per cent in his monetary policy announcement today. When markets expects something, it factors the movement much BEFORE the news is out probably a couple of days before. So markets move huge ONLY if what they expected did NOT happen or something very unexpected happens.
For example if RBI would have decreased rates, then markets would be flying high now. Had it increased rates, markets would have nose-dived. But since the news met expectations nothing major happened – except the drop in volatility.
What is INDIA VIX now?
When I started writing this article at 11 am it was 15.97 (-2.80%) down from yesterday’s close.
Now at 11.45 am it is 15.88 (-3.35%) down from yesterday’s close.
The fall may continue today so the best time to book profits is after 1 pm.
Update at 1.50 pm: Like I said it will keep dropping at 1.50 pm INDIA VIX is at 15.70 (-4.44%) since yesterday’s close. Nifty also did not show much movement for the day – just 10 points is virtually NO movement. Book Profits NOW and close your Intraday positions. If making reasonable profits in strategy 1 close it too. Do not wait more.
We will wait for another opportunity to enter markets. Good traders are NEVER always in the markets. Enter when there is an opportunity and exit with profits as soon as you can.
Update at 3.30 pm: INDIA VIX closed today at 15.63 which is -0.80 from previous day’s close or -4.87% down from yesterday. Nifty also did not move much – closed at 7954.90 or 19.65 (+0.25%) points up from yesterday close.
I think a lot of you would have booked good profits.
Build Wealth Slowly Should be Your Mantra.
Enjoy the profits.
I hope you are enjoying my newsletters and profits too. 🙂
All The Best.
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What you should do now1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.
2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.
3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.
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Here is complete process of my course1. Once you pay I will send you the course materials for studying to your email.
2. You read and ask me questions via phone/whatsapp/email to clear doubts.
3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
5. Since doubts can come anytime the support will be there for one year.
Within one month you can start trading on your own. No need to depend on anyone once you are on your own.
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.