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Sudden Drop of India VIX Means What

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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What To Do In This Lower Circuit Hitting Market

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

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What to Do in A Huge Stock Market Fall

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

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Margin of My Course Strategies will Reduce in May 2020

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

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Why Nifty Has Become So Volatile in 2020?

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

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Union Budget 2020 Is Coming What to Trade

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

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Nifty Looks Bullish Jan 2020

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

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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

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Sometimes You Must Ignore Bad Trades

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

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Learn Intraday Trading Free

These trades are equity and options intraday trades done by me in my research account and some are given by my clients. You can get started with as little as Rs.10,000/- but later you may need more to get such results. Just to help you get started in stock markets I can give you this strategy for free.

Learning this strategy is important but what is more important is to become a disciplined trader. Probably you will make approx 500 a day, but the rules given in the strategy have to be followed by you, and when you start following it, you will become a disciplined trader. It is very important to be a disciplined trader if you want to succeed in trading equities, options or futures. 99% of traders lose money because they cannot control greed and break the laws of trading. If you can learn to be a disciplined trader I can assure you that you will become a much better trader than what you are today. The strategy is just 10% for the reason of successful traders, discipline takes away 90% of the credit. read more

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