Musings

My going in mindset for the trade on 6th Jan   1. Nifty was very upbeat with last 10 continuous days of uptrend (680 points up) and no reason to consolidate. 2. I was frustrated with the continuous upmove even without much of solid +ve news - Never go against the market which is flooded with liquidity 3. On 5th Jan -  nifty ran up 125 points on and closed at 14200 only 100 points below from my strike price of 14300 CE for 7th Jan - It seemed easy for NIfty to run up 100 points in 2 days  4. I was not able to sleep on 5th Jan as i feared my CE position will run into ITM and i was determined to do adjustments - but this time w/o giving away any money to market by moving to next expiry- I made 3 plans - (a) agressive adjustment - to sell 14000 PE in 7th and take out all money in the same expiry (b) sell PE and CE on next weekly expiry with 300 to 400 points distance (c) Move to monthly expiry or 21st Jan  I was also on weekly Connect call with my office team- So de...

  If one day if i can go back and rectify in my past that would 21st December and particularly 2:30 to 3:00 PM I'm not sure what has gone into my mind- its absolutely ridiculous and unbelievable how i reacted to the market drop I very well know that there is high probability that the market is going to crash, but yet i was not prepared to / rehearsed my actions when the market crashes You know that consolidating market is always dangerous and you knew that several times in the past market if it consolidates for longer duration it is more likely to break out - when you know that upmove and all the good news for which the market trended positive are factored in (stimulus bill) then you should know that crash is highly likely and you should have closed all positions or atleast reduced your position.  Not closing     

 Swing trading is a trading methodology that seeks to capture a swing (or “one move”) in the markets. The idea is to endure as “little pain” as possible by exiting your trades before the opposing pressure comes in When the market is trending, it doesn’t go up in one straight line. Instead… It moves higher, pullback towards an area of value, and then continue trading higher. And where does the market retrace to? Possibly towards the Moving Average In a strong trending market, the price tends to pullback towards the 20MA. In a healthy trending, the price tends to pullback towards the 50MA. In a weak trend, the price tends to pullback towards the 100MA and beyond. Here’s how to do it: 1. Identify a range market (market condition) 2. Wait for the price to reach Support (area of value) 3. If the price reaches Support, then wait for a False Break (entry trigger) 4. Set your stop loss 1 ATR below the candle low and take profits before Resistance (stop loss and target profit)

Support – An area on the chart with potential buying pressure to push the price higher. Resistance - An area on the chart with potential selling pressure to push the price lower.  Role reversal If the price breaks below support, previous support becomes resistance. If the price breaks above resistance, previous resistance becomes support. Dynamic Support & Resistance Support & Resistance can also move along with price, which is called Dynamic Support & Resistance. Dynamic support occurs in an uptrend, and dynamic resistance in a downtrend. They can be identified using moving averages (I use 20 & 50 EMA). Impulse & Corrective moves Impulse move - "Longer leg" on the chart, which points towards the direction of the trend. Candlestick size is usually larger, signaling momentum behind the move. Corrective move - "Shorter" leg on the chart, which is against the current trend. Candlestick size is usually smaller because of traders taking profits, witho...

 Option pricing methods Black-Scholes Model The Black-Scholes Model is probably the most used model for pricing options. It was developed in 1973 by the economists Fischer Black, Myron Scholes, and Robert Merton. This model is used to calculate the price of European options. The formula for the model is complicated and most traders will not want to do the calculations themselves but will instead rely on one of the online options trading calculators. Cox-Rubenstein Binomial Option Pricing Model This model is a variation of the Black-Scholes formula. This model uses the value of the underlying security over a period time, instead of just at the expiration date. For this reason, this model is often used for valuing American options which can be exercised at any time during the contract period. Again, calculating this formula by hand is probably not what most investors are going to do and a variety of online calculators can be used for this purpose. Put/Call Parity Put/call parity refe...

 The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short. Trading tips for Iron Condor option Strategy: This strategy works best on the stocks which have low  volatility. My advice is to open Iron Condor option strategy on any of the stocks if it fulfills all the below criterion: The stocks which have average daily volatility less than 1.25% The underlying stock price has not crossed any significant level on any side within past 4-5 days. The technical analysis is not showing significant movement on either side. There is no important announcement by the company management in next 10 days Close the trade if you have achieved more than 30% of the maximum profit calculated or before that depending on the situation. Trading tips for Short-...

 Date 25-11-2020  One day before expiry- if 190ce was held till expiry and its in ITM then its possible to move to next month 10 points above to DEC 200 CE at a profit. if in ITC falls then 200 CE will depreciate and you can get out of this CE position w/o loss   in case 200 CE gets in ITM slightly we can make same adjustment next month and push to jan otherwise in case if 200 CE is deep ITM then below is the premium difference during the expiry  Learning :  1. Choose a stock which does move continuously in the same direction , even if it moves it should not move drastically 10% month after month - Deep ITM adjustment will lead to loss while light ITM option can be moved for profit  2. When you know that your one side is getting into ITM- sell more on the other side to make more profit which  can used to get out of losing position