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The budget week is a very dangerous week for option traders. Nifty can go anywhere and the options premium will reduce very fast.
We have entered into a dangerous week – the Budget Week.
Tomorrow the Budget Session of Parliament starts and government will present the General Budget on February 29, 2016.
Huge volatility can be seen in the markets.
It looks like expiry will be as usual, this Thursday the 25th of February 2016.
Are you buyer of Options?
If yes, it is better to shift to the next month – March 2016. Last 5 days are worst for options. It does not matter how much the VIX increases, theta will have a big effect on options and their premiums will decrease no matter what.
March options still have 38 days to expire and VIX not going down at least till Friday means chances of making money increases. Please note that risk is always there, but this one looks like a calculated risk.
As an option buyer it is very hard to fight melting premiums, therefore I highly recommend avoid trading current month options.
On the other hand February 2016 options will now be cheap and will lure buyers, unfortunately still they will lose money.
For example currently Nifty is at 7220 and the ATM Feb call option of 7200 is quoting at 59.40. That’s quite cheap isn’t it? But since only 4 days are left for expiry, even at 59.40 this is too costly.
If you are sure of a move then buy March 7200 Call option NOT February’s.
But remember VIX drops like a knife falling from Monday onward. So if you plan to buy options today you must close it on or before this Friday – 26th of February 2016.
So should you sell these options?
No selling now is even more dangerous. Why? Because you dont know what is in store in the budget day or any news coming before the budget day. There can be a sharp rally or a sharp fall. We dont know. So it will be better to stop selling this week.
When should I start selling options again?
From Monday onward. In fact Tuesday is the best day. All the news and movement will be out, and frankly the traders will be too tired to trade the rest of the week. So selling can be very lucrative from Tuesday – 1st of March 2016. Nifty will not move much at least from one week from 1st March, and VIX will keep falling – so premiums will drop heavily.
For People Who Have Done My Conservative Course:
Its highly recommended that you start trading strategy 1 from 1st of March 2016. If you are keen on trading now its better to trade with reduced lot size. Please show some patience and take less risk this week. Years are left to make money, one week cannot reduce your profits however this week has the potential to take away a lot of your profits you already made in last few trades.
Note: I have decided to send more newsletter henceforth. Probably 3-4 every week. When I don’t send a newsletter for a few days then people WhatsApp me to send newsletters. 🙂
Please also read my newsletters. I have to pay for the emails in the database. And its not cheap. If you do not read, unfortunately I will have to delete those emails.
Disclaimer: Views and opinions in this article is my personal opinion. Please do your own research before entering into any trade as suggested in this post. This is part of newsletter sent to my subscribers today. If you want to receive such newsletters please register your email here.
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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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Course fees: Click here to know the course fees.
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.