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INDIA VIX at 30 Exit All Positions

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NOTE: Part of newsletter sent to my subscribers on 01-September-2015 at 2.30 pm.

Trading should be halted when VIX reaches 30, and also read to know what should be done if Nifty is down by 10% in one month.

India VIX has crossed 30 is now near 30.28. This is a bad situation for traders.

Those who have taken my course know that I stop all trading when VIX is near 30. Since it has crossed 30 – it is considered very dangerous to trade. I request you to EXIT ALL POSITIONS except cash equity holdings.

Re-enter when markets become normal and VIX goes below 25. It won’t take too much time. Since we are hedged the loss should be small.

VIX at 30 means there is a lot of fear in the market, and options premium have exploded. More importantly during these times we just don’t know how the markets will behave for next couple of days, so its better not to trade.

Those who took the course recently – do not enter now. This is not a good time to trade either for the buyer or the seller of options.

I will send an email when you can enter.

Those who buy options, please do not buy thinking VIX will increase further. It may or may not we don’t know. But usually when VIX is over 30, it only tries to calm and come down. VIX can drop anytime and option buyers will lose money. Sellers are at even more risk as VIX at 30 means anything can happen. When anything can happen, its better to watch the markets rather than trade.

So right now watch the fun from sidelines. DO NOT TRADE.

But if you have cash one trade can be done now – the conservative stock option trade. Since the premium will be very high you will get great money on margin blocked plus good stocks are down now and chances of making a good profit are very high.

Nifty Down is A Great Opportunity

Good blue chip stocks are down. Great time for bargain hunting. Look for your favorite stocks and trade the stock option trade, or just buy the stocks in cash, or make a reasonable investment in large cap mutual fund like ICICI Prudential Focused Bluechip Equity Fund or ICICI Prudential Value Discovery Fund.

We should not let go these small opportunities whenever markets gives us such great opportunity to trade. And you should know to some extend what may happen in near future. Since the markets are down more than 10% from its recent high – there is a lot of chance it will try to go up in near future. Which means that the stocks or mutual funds that you bought can be flipped for a small profit. The cash can then be free and hopefully if everything gets back to normal, you can start trading.

There is 1% exit load though in the above mutual funds, but when you buy mutual funds your risk is lower. If you do not buy stocks and buy these mutual funds, it almost guaranteed that when Nifty will be up by 10% within say next 2-3 months, chances of which are great – you will end up making more than 10% profit on your cash.

With one or two stocks that guarantee is not there but with these funds its almost guaranteed that you will make that 10%. The risk is the 1% that they will cut when you exit the fund within 365 days – after that there is no exit load. If you exit within next 365 days they will deduct 1% and give you the rest. That’s OK as you still get to keep 9% of the profits.

Some people say mutual funds also have an expense charge that reduces the profits. Frankly when Nifty will recover 10%, usually these good funds will make 11% or more since they are managed by good fund managers, and all the expenses including the exit load will be taken care of by these extra profits.

You can also buy Nifty BeES, but the problem with Nifty BeES is that it will mimic Nifty, so it cannot beat it. However on the plus side, there is no exit load and the expenses are also very low. If you have experience with buying Nifty BeES, then buy them, else I recommend good mutual funds, especially the large caps or large and mid-cap funds.

Mutual funds has a manager who tries to beat the Index – and if you see track record of good funds you will see that they actually beat Index by a good margin. I like that. The above two funds are great choice to enter now and exit when Nifty goes up. However you may have to wait for some time before Nifty reaches levels of 8500 again.

How to Invest in These Funds?

Ask your broker. He will have a platform to buy these funds. You can then ask collateral against these funds to trade options. Some give, some don’t, so please ask your broker. Or you can invest directly by going here:


Note: If you are directly investing using the above link then choose the “direct” fund option and not the “regular”. Direct funds have no commissions to be given to anyone, so their returns are slightly higher.

If you are a registered member of ICICI mutual fund, investing in these funds will take less than 5 minutes. The day you exit, you will see the cash in your bank account the next day.


If you know what you are doing and why, then making money from stock markets is not a big deal. If you keep trading out of the urge to trade and speculations, then sooner or later you will only see losses in your account. You may have a lot of fun though with the thrill of trading.

Well trading is not fun – its a business. Those who trade for fun are the ones who are trading now and losing. Intelligent traders know there are some times when you should not trade – and that time is now.

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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 6 comments… add one }
  • Ragunathan September 1, 2015, 10:08 pm

    Sir, its an excellent article. Your timely investment idea opened a new opportunity in the time of turbulence in market. You have suggested large cap and mid cap funds. But what about thematic funds or sector specific funds? Can one invest in the top rated funds as suggested by moneycontrol. Com or any other website. Because your idea showed a light in the tunnel i would like to invest for at least 2 months in mutual funds so that after the market will stabilized i take some profit i planned to enter in strategy 1.
    Thank you Dilip sir.

    • Dilip Shaw September 3, 2015, 5:17 pm

      Thank You Ragunathan.

      I do not like thematic or sector specif funds. Sectors have a cycle and its very hard to identify which sector will perform and when. Remember the craze of investing in Reliance Diversified Power Sector Fund and ICICI Prudential Infrastructure Fund during the bull run of 2006-07? What happened to those funds? They are still biting the dust and other normal equity funds have marched way forward.

      In any case the fund manager in an equity fund has all the right to choose his companies and invest. If he is good he will find a few good companies in a particular sector and invest. Since he will try to diversify, other companies work as hedge just in case the sector does not perform. With thematic funds, that hedge is not present. I am sure you know how I am a huge fan of hedging. 🙂

      Lets take an example of some sector specific funds that are still doing good: SBI Pharma Fund (5 year return of 30% annually), ICICI Prudential FMCG Fund (5 year return of 18.8%), and Reliance Banking Fund (G) – due to recent fall in banking stocks returns are low, still it is returning 10% in last 5 years. On top of that a SIP in the above funds would have done wonders but then a SIP in a good equity fund would have returned almost the same. So why take extra risk?

      Good idea to now invest in a fund when the markets have fallen sharply, and wait for the markets to go up and stabilize. Then book profits and start trading. In fact I did a few things today that I will let everyone know tomorrow or day after.

  • Sunando September 2, 2015, 11:20 am

    Hi Dilip

    Can you state something on Liquidbees ,parking money there yields daily dividends annualising them comes around 7%+ and its easy to buy and sell with our existing demats/brokers.


    • Dilip Shaw September 3, 2015, 5:22 pm

      Hey Sunando, there are plenty of liquid funds pretty safe that return more than 9% annually with ZERO exit load. I do not understand why would someone like to sacrifice 2% for the same effort, time and safety.

      Your broker should be able to help you buy/sell other liquid funds as well. When the returns are more for the same safety I assume its common sense to go with the funds that give better returns. 🙂

  • Birju September 22, 2015, 12:42 am

    Plxx make a PDf /ebook of –Free Nifty Option Trading Strategies cozz its hard to open every tab page and read.

    • Dilip Shaw September 22, 2015, 11:49 am

      Ok will think about it. But when I can work hard and write, why cant you work hard and read. 🙂

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