Saturday 6 October 2018

Trade plan post 78% correct in Nifty

I started this blog with an aim to earn to 4000 Rs in one month with 2 lakhs capital. I am on target till now.

I didn't do intraday trade on Friday as I lost small a mounts two consecutive days.

Market constituents got changed in last two weeks. Indian market is in strong grip of bears. FII and pro are selling indian options and selling synthetic shots.

Key points that I am considering

1. Nifty closed  below 200 DMA
2. Nifty completed 78.6% correction from the high of  last six months.
3. Key stocks  HDFC bank, HDFC, LT, Reliance,ITC, Maruti, Kotakbank and Gail are in oversold territory. But, this is not advisable to catch  falling knife and it also advised to buy the fear .
4.There are several points which can drag market any direction like  crude oil price , USD/INR conversion rate, sanction on Iran, festive seasons in India and forthcoming result of companies.
5. Indian VIX is around 20 now.

I expect market will make a short term bottom on 8th or 9th and will give a small short term upward rally.  There might be a sharp gap down on Monday before market corrects itself.

I decided to accumulate HDFC , Biocon, ITC, Kotakbank, Gail , Maruti, UPL shares for long term wealth building. 


Weekly income - , I will deploy both sides credit spread for BNF.

Monthly income  - Last Friday, I shorted  10000 PE , went long with  9800 PE and shorted  10600 CE

Margin used - 114000

days to expiry 18 days

Delta :-40
Vega :-1387

At current IV skew, PnL for this option strategy on the day of October expiry.

My PnL is around 14k per lot between 10040 to 10600.



Adjustment plan for monthly option position:

1. Market down :


  • Sell Nifty future below 10260 to increase delta
  • Add 9800 PE to keep vega under 1000
  • Nifty crossed below 10000, move 10000 PE to 9600 PE.
  • Square off 10600 CE and create a new short position 300 above nifty sport


2. Market  up


  • Buy NF once nifty cross 10540.
  • Move 10000 PE up by 100 points 
  • Buy call options to manage vega

Challenges:

1. Short vega. This will impact option short positions and benefits buy positions.
2. High volatility increases management cos of the position as I might require frequent adjustment.



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