Musings of Options Trading

Date :20-04-2010
Place: Office Desk

As the Readers(if any) know  that am jobless today also...so i  kept my hands on options. It started from 8.45 am when i switched on my mini and started seeing the news channel. Gentlemen over there in white shirt and Red tie was telling that NIFTY will be in range bound... hahaha...wow..we got to know that nifty now 5200 will be in range bound from 4900 to 5450 from this guy...hehe ....thats +_5%..any lame person who sees market movement can tell this..whats the big deal...this is how i thought after hearing that from a guy of well known brokerage firm..

Today is special day coz many people are coming in this news channel with a white shirt and red,black,green etc TIE and shouting in there microphone that market direction in shortterm will be decided by the RBI monetary policy which is going to come  later in the day...(by the time i wrote this..already they announced the policy , will talk on that later...) Now i also know this and closed all my positions in options the other day...coz anything can happen after the announcement .

BTW am watching CNBC news channel over web...and Udyain i guess he is the main reader.he looked very smart form my observation on his knowledge about different sectors and wide indepth analysis of questions he asks the speakers . i cam to know that rbi policy will be around 11.15 am ..and was watching the market trend as it approaches 11 ....and its unable to break 5225...for quite some time..so i bought nifty 5200 put at 55 and waited for the rbi announcement....even though many speakers said that RBI will go for normal hike of 25 bps..in expectations of market...but some how i was not convinced by that..and was expecting RBI to make some tougher stand of going for 50 bps..coz of the inflation and run up of metal ,oil prices..some how it didn't happen..i guess RBI  were under different assumption(May be of uncertainty of monsoon and growth in private demand)..

The announcement of policy was taken in positive way and market reacted by jumping 30 points instantly and premium went to 40 rs ...so am on loss of 750 rs.(MTM..Market to Market)....l was bit disspointed coz intially i placed order at 40 and later changed it to 55...so a bit disappointed coz i missed that oppourtinity..anyway its over..so went to office..and from there..i did watch nifty for some time..and it was finding difficult to break 5250 and again i went for another lot nifty 5200 put for around 41 rs...in a matter of few mins...market started feeling the pressure and it dropped..a few points..and due to volatility premium again went back to 56 ..after drop of 20 points..to 5235...so i squared of here..for 56 rs and got a profit of 750 Rs and my second lot....now market at end of day is not going down..and struggling to go up or down..and i placed nifty 5300 call for 25 rs and got executed and later in day it went to 30..but still i didnt squared it off...

I hold 5200 put and 5300 call for now...just that i don't want to square 5200 for now..

hope market opens in Green in morning...so that i will square my call and again buy at lower price...

Thats all for now..c ya again later


PS: Office Desk is my IT Company Office Desk

Watch List

Posting these stocks over here so that i want to keep track of it .

Texmo Pipes & Products Ltd.	72
Indage Vintners Ltd.	37
Blue Bird (India) Lt	17
PVP Ventures Ltd.	17

• texmo came up with IPO and failed at box office..Need to see the business model  of this company which entered into industry which has high competition
  
• Indage is wine making company and the promoters instead of making wine and selling it to us themselves consumed it inturn there balance sheet went into red
• Fell from 600 levels to 40+ levels
  
• BlueBird india is into printing books and in the world of digitization they don't have a back up business plan and started getting less orders
• Fell from 60+ levels to 15+
  
• PVP Ventures is by a NRI business man who had a large properties in and around chennai, This guy has a uncanny ability of picking companies at low valuation and improving the business and sells at high value( example is Aircel..which is well used in South india)
• Fell from 70+ to 20+ levels
  

GoldMan Sachs Credibility at Risk

I always belived that if some one losses money then there is always some one to gain it.
Say on particular Transaction if make a bet then you should be knowing of risks involved in it .i think
bettiing is not the right word here but still i use it cause thats how its frameworked .Anyway lets carry on..Betting in markets means u go by certain rules ..which if violated mean that we are cheated..thats exactly what happened with Goldman Sachs and its facing a serious crisis and its credibility is at stake.

Now people will suspect of  any transaction or product it makes...
they might go for head of Blankfein

God Bless Goldman

More can be found at this location

http://www.sec.gov/litigation/litreleases/2010/lr21489.htm

What is IIP? How it affects stocks?

Every month the stock markets wait with bated breath to hear the IIP numbers. These numbers decide the market movement. But what is IIP? What is its relationship to the stock markets?

IIP, the key tracker of industrial production

IIP or the index of industrial production is the number denoting the condition of industrial production during a certain period. These figures are calculated in reference to the figures that existed in the past. Currently the base used for calculating IIP is 1993-1994.

Importance of IIP

As IIP shows the status of industrial activity, you can find out if the industrial activity has increased, decreased or remained same. Today it is important because with the news of recession hovering over the horizon, better IIP figures indicate increase in industrial production. It makes investors and stock markets become more optimistic.

Its relation with stock markets

The optimism amongst the stock markets and investors translates into the markets going up. This is because the markets expect the companies' performance to increase. This ultimately leads to the growth in the country's GDP. It implies improvement in country's economy, thus making it an attractive investment destination to foreign investors.

Computation of IIP

The first time IIP used the year 1937 as its reference point. It contained only 15 products. Since then, the criteria for the base year as well as the number of products have been revamped 7 times.

Currently, IIP uses 1993-94 as the reference year and includes items whose gross value of output is at least Rs 80 crores and Rs 20 crores at gross value added level. The products included are the ones used on consistent basis and can comprise of small scale sector as well as unorganized production sector.

They are segregated into 3 sections: manufacturing, mining and electricity. They are also classified on the basis of usage: capital goods, basic goods, non-basic goods, consumer durables and consumer non-durables.

The numbers for IIP are released within 6 weeks after the end of the month. This data is collated from 15 different agencies like Department of Industrial Policy and Promotion, Indian Bureau of Mines, Central Statistical Organisation and Central Electricity Authority. But at times, the entire data may not be easily available.

Hence some estimates are done to generate provisional data, which is then used to calculate provisional index. Once the actual data is available, this index is updated subsequently.

Though IIP does indicate the condition of the country's economy, it should not be taken as the sole basis for investment. This is because some sectors may show higher performance as compared to others. This was evident in the recent past when realty sector showed higher performance, pharma sector lagged behind.

 So you need to check the reason behind the increase/decrease in IIP figures before investing.

Here is the link where we can see the latest IIP results

IIP-Index of Industrial Production

Musings of Options Trading

Date 30/03/2010

Even though i started doing option trading from some time back this is my first post where am doing post Morten of what i did on that day , since my memory is leaking this might act as proof of what i did .

few days ago i bought 5300 put when market was around 5300+ on last friday or monday at around 90. I got this brilliant idea of selling a put( which in fact is destructive idea) at 25 Rs. so when i did the same with icici they asked for margin of 16K for it though probability of loosing that position is very less since i am holding  5300 put . so after lot of thinking  went ahead and sold a put for which i got around 1000 Rs after brokerages . Now for the past two days market went down..so my 5300 put went from 90 to 130 and i thought pf taking that  profit and renter again to buy 5300 put at 90..so in my desperation to square of 5300 put i closed at 125 Rs at around 3:10 PM expecting that market will not go down much from there since another 15 mins is there for market closing .To my utter surprise market fell in last 15 mins and premium went to 130+ Rs .I felt disseminated at my self for waiting till end of day . And the biggest surprise came after another 3 hrs and before US markets opened they released ADP report which gave a bad signal to markets and Europe almost drop 1% and dow and S&P dropping half a percentage and this started my worst nightmare of the year which made me to write this post. Problem is i am having naked 5000 put which can go completely wrong if markets go down..and i don't have a 5300 protection ,so for whole night i was praying that market (nse) should not open in down...and my prayers were answered for now...I feel am lucky to survive for today Will see from where i will head and ob markets head