Read to know why Nifty is getting too volatile recently there is always a reason for too much volatility.

Reason 1 For Volatility:

There is some kind of uncertainty in the stock markets. Here are the reasons for uncertainty:

In short US will go to polls on November 8, 2016. And results will be announced on November 9, 2016.

The contest is between Democrat Hillary Clinton and Republican Donald Trump. Whoever wins the election, will become the 45th President of the United States of America.

Frankly most Indians business houses favor Democrat Hillary Clinton to win the election because she is pro India and pro-business. No one knows about Donald Trump, so they do not want anything unknown to happen.

But we all know it is not in our hands or hope just like speculators traders trade in stock markets on hope. It is in the hands of what most Americans want and vote for – just like stock market trading where only that things happens what most people want not what you or me want.

That’s a major reason why speculators lose money and well planned traders make money.

One point which is bothering most India market investors is that former secretary of state and Democratic presidential candidate Hillary Clinton’s double digit lead has somewhat eroded after the Federal Bureau of Investigation (FBI) announced fresh investigations into emails allegedly linked to her use of a private server. I am sure you all must have read this in news too.

When will the next US President be announced?

270 votes are need to win the US Presidents post. Whoever gets it wins. Due to a lot of scandals going on there is a chance that counting may happen again. Whatever most likely the winner will be declared by 4 am GMT (9:30 am IST), on November 9, 2016 when the polling will close in all states aside from Alaska. But Alaska does not have much voters to change the winner.

All this will be known by the world by media but the formal announcement will be done when vice-president Joe Biden will announce the Electoral College vote most probably on January 6, 2017.

India markets will do whatever they want from November 9, 2016 to November 25, 2016. After that things will become normal.

Most likely if Democrat Hillary Clinton is announced the winner, Indians markets will surly go up and if Republican Donald Trump is announced the winner markets all over the world will take it negatively.

So what to trade now?

This advice is obviously hidden from this website and goes to my course subscribers only as it is part of my course.

The simple reason why India VIX is increasing almost every day and Nifty falling is that US elections are coming. According to a recent pre-poll survey Hillary and Trump both are fighting neck to neck. In fact in this recent survey Trump has taken a lead.

The world knows a little about Hillary and what she might do to US economics which effects the worlds economics including India. She is pro-India. However not much is known about Trump and what he will do after becoming US president is a pure guess.

For that reason alone and due to slight nervousness India VIX is increasing. It will start dropping fast once the elections are over and results are announced.

In just 5 days US will go to polls. I am sure within a week we will know the final results or the winner who will go on to crate history and become US President.

Till then VIX will keep rising.

So what to trade now? It comes under my course and this advise goes to my course subscribers only. It does not goes to free subscribers. If you want them you can enroll for the conservative option course here.

A Very Happy Dhanteras to you all. Hope prosperity prevails among all of us.

I know most of you will buy Gold Today for prosperity for the entire year to get Maa Laxmi blessings.

Here is the best time to buy Gold, Diamond or Silver:
12.05 pm to 1.27 pm.

To perform Dhanteras Puja:
5.30 to 8.30 pm.

Now some important financial information on How To Invest In Gold this is applicable to all so please read:

1. If you are rich you can buy any jewellery for yourself or your family members today. For you money does not matter so nothing more to say. Or do not buy its your choice.

2. If you are not so rich and cannot afford more than Rs.30,000.00 I suggest for next three or four years buy Gold or Silver biscuits on which there is NO making charges. Preferably gold as it becomes an asset. Make sure they are Hall-Marked as it a guarantee of purity by government of India. Something like 916 and a triangle (Hall-Mark sign) will be made on it somewhere in a corner. Make sure it is there. The gold seller will tell you where it is else do not buy.

In reality this is an investment in a SIP mode where you average out the cost of the gold next 3-4 years. They are available from 1 gram to 50 grams. You can buy whatever you afford.

If gold prices fall next year buy more grams.

After a few years you will have enough gold to sell and buy a big jewellery for your wife or/and yourself and exchange gold for gold. You will then have to pay only the making charges. You will feel that gold you got for free.
It will not pinch your pocket.

3. Gold bonds are also available which you can buy online from your broker. You can ask him and he will tell you how to buy. If your broker does not allow you to buy Gold bonds please fill this form I can help.

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Gold bonds are more safe and it comes with a guaranteed return of 2.5% a year on the purchase price. But if Gold prices decreases the bond price will also decrease. And similarly if Gold prices increases the bond price will also increase plus you also get that 2.5% interest. So you can do that too.

Please note that buying Gold is different than investing in a Gold bond. Please do not mix them. These are two different things.

Keep your gold safe. If you have too much gold I suggest open a locker in your bank. There is a charge involved please ask your bank manager for that. If you have less then no need for a locker.

Hope this article will help you to invest in Gold.

Here is what I got withing 2 hours from one of my course subscriber when I emailed yesterday that some do not even call me for a single doubt after doing my course:

Janardhanan 27 Oct 2016 testimonial. Your results may differ.

Thank You Mr. Janardhanan.

Just to let you know at least 20% of my course subscribers DO NOT contact me ever even for one doubt in my course. I think there are two reasons for it:

1. The course is very easy to understand written in a very simple language. So for experienced traders doubts do not arise at all.

2. Some people just enroll in the course to give me a tuition fee that’s all because they have learned a lot from my website and made money trading and they want to pay me for that not necessary for my course at all.

I think 20% is less it could be more. Some do not even ask me a single question before paying for the course and not a single question after paying me.

If you are one of them you are really special. Thank You from the bottom of my heart. Wishing You A Very Happy and Prosperous Diwali 2016. May God Bless You and Your Family for helping me keep doing my job of educating traders.

One thing is for sure you do not get anything for free in life. Even if you are my free subscriber you have to read what I have written to learn it. So you are giving it TIME and HARD WORK. Both are not free neither for you nor for me. That is the reason I charge for the course.

What is the difference between a free subscribers and someone who has done my course? The difference is HUGE. People who have done my course trade with a plan and make profits without tension every month, but those who have still not enrolled just are doing the same that is keep trading in tension and keep losing money.

You invest more and get more that’s all. You invest less and get less this is how the world works. Knowledge cannot come for free.

Today is Expiry day for all derivatives Options and Futures expiring on October 2016.

If you have bought or sold an Option which is In The Money (ITM) you must close them before 3.15 pm or your risk manager or broker will close them at market price by 3.25 pm as a risk manage measure.

If you are a seller buy it back and if a buyer sell it before 3.15 pm to avoid getting it closed at market price.

If the Options you bought are Out of the Money by 3.15 pm and there is NIL chance of them getting In The Money then no need to close. You will save on brokerage charges and STT.

Options expiring next month or after that will not be closed today as their expiry is on a later date so do as you wish with them.

As far as Futures expiring today is concerned please close them all. It does not matter if you are a buyer or a seller of Future. Keep an eye and as soon as it is in profit just close it.

In this article learn the difference between an option time value and intrinsic value in short.

Before reading this please open my last article on Call Option Put Option Pricing Differences as the Stock Moves up and down. Please open it in a new window. In fact by default it will open in a new window. This is because you may have to refer to it sometimes.

Now that you have opened it please see that Nifty yesterday was at 8674 and these were the prices of Call Options yesterday:

NIFTY 27-Oct-16 CE 8,850.00 2.95 (OTM)
NIFTY 27-Oct-16 CE 8,800.00 7.40 (OTM)
NIFTY 27-Oct-16 CE 8,750.00 16.00 (OTM)
NIFTY 27-Oct-16 CE 8,700.00 32.90 (OTM)
NIFTY 27-Oct-16 CE 8,650.00 59.00 (ATM)
NIFTY 27-Oct-16 CE 8,600.00 95.75 (ITM)
NIFTY 27-Oct-16 CE 8,550.00 137.40 (ITM)
NIFTY 27-Oct-16 CE 8,500.00 182.60 (ITM)
NIFTY 27-Oct-16 CE 8,450.00 215.10 (ITM)

As you can see as the strikes move Out of The Money (OTM) the premiums start decreasing and as the strikes moves In The Money (ITM) the premiums starts increasing.

Now here is where the time value and intrinsic values are doing their job.

Yesterday was 25-Oct-2016 and the expiry date of Oct 2016 option is on Thursday, 27-Oct-2016 (tomorrow). Since time to expire yesterday was two days the time remaining is very less, you will see that today the premiums of the October month for ATM and OTM options will be much less than what it was yesterday.

ATM Options of Nifty on 25-Oct-16, time remaining to expire 2 days and few hours:

ATM Call Option: NIFTY 27-Oct-16 CE 8,650.00 59.00
ATM Put Option: NIFTY 27-Oct-16 PE 8,650.00 34.65

ATM Options of Nifty today (26-Oct-16), time remaining to expire 1 day and few hours:

Nifty currently at 8635 so we take 8650 as At The Money (ATM) Option.

ATM Call Option: NIFTY 27-Oct-16 CE 8,650.00 28.50
ATM Put Option: NIFTY 27-Oct-16 PE 8,650.00 36.30

As you can see both days At The Money Option was at the strike price 8650, but since yesterday Nifty has fallen:

8674 – 8635 = 39 points – technically it is not much but a lot of ATM long option straddle buyers (traders who buy both Call and Put Option of the same strike same expiry hoping to make money from even a small movement) must be in loss today. Let us check the difference on ATM strikes of both Call and Put:

Yesterday: 59+34.65 = 93.65
Today: 28.50 + 36.30 = 64.80

Loss = 64.80 – 93.65 = -28.85

Some greedy traders buy 10 or more lots let’s see their loss = -28.85 * 10 * 75 = Rs.-21637.50.

More than Rs. Twenty One Thousand + brokerages + taxes loss in a single day. That’s Mr. Greed for you. The biggest enemy is inside you but your Ego is not letting it go. Both Ego and Greed are traders biggest enemies. It is more than 50 years now but they still do not recognize them and keep losing money. Please let your greed and ego go if you really love your family.

Coming back to our topic. What I was trying to say is that as expiry comes near the time value evaporates fast. It evaporates like ice. In the month start it evaporates slowly but in the last week it starts evaporating pretty fast.

Time value of every option be it Nifty or any stock becomes ZERO on the expiry day 1 minute before the end bell rings.

In India it is 3.30 pm. In India at around 3.29 pm 100% of time value of all options expiring that day will become ZERO, only intrinsic value will remain.

Tomorrow is expiry day. You can check values of all OTM (Out of Money) Options of both Call and Put of any stock or underling will be very close to ZERO or will already be ZERO at 3.29 pm. Do check it out. If you are reading this after 27-Oct-2016 you can check option prices at 3.29 pm on the nearest expiry day for options expiring that day.

Next will be slightly advanced class where we will discuss in-depth details on the Time Value and Intrinsic Value of Options.

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In this article we will discuss why Call Options behaves exactly opposite of Put Options as the stock or the underlying moves up and down.

But before we discuss, it let me tell you that there are primarily six factors that effects Option Prices where liquidity is high. Where it is less liquidity unfortunately there is one more factor that determines Option Pricing.

We will discuss all of them over the next few days.

Let’s start with the most important factor then go down to the lower factors. So the factors that influence option prices are in decreasing order.

1. Stock/Underlying Price:

Whenever market makers like NSE, BSE, or MCX software decide to price an option the first thing that they see is the stock or underlying current price in trading markets or the spot price.

For example right now today Nifty is at 8674. As we have already discussed the nearest is the At The Money (ATM) Option which is 8650. Now 8650 will be taken as base and option prices will be decided.

NIFTY 8,650.00 CE Call Option expiring on 27-Oct-16 is currently trading at 59.00.

Since it is a Call Option it has to rise (go In The Money (ATM)), if Nifty rises and fall (go Out of The Money (OTM)), if Nifty falls. Therefore Call Options of the same expiry above 8650 must be cheaper than 59.

Lets check:
NIFTY 27-Oct-16 CE 8,850.00 2.95
NIFTY 27-Oct-16 CE 8,800.00 7.40
NIFTY 27-Oct-16 CE 8,750.00 16.00
NIFTY 27-Oct-16 CE 8,700.00 32.90
NIFTY 27-Oct-16 CE 8,650.00 59.00

As you can see as we move up Call Option prices start decreasing because they all are Out of The Money (OTM).

If we move down Call Options will start increasing because they all go ITM (In The Money):

NIFTY 27-Oct-16 CE 8,650.00 59.00
NIFTY 27-Oct-16 CE 8,600.00 95.75
NIFTY 27-Oct-16 CE 8,550.00 137.40
NIFTY 27-Oct-16 CE 8,500.00 182.60
NIFTY 27-Oct-16 CE 8,450.00 215.10

I will discuss later why these things happen.

Please note that exact opposite will be for the Put Options (PE), because as Nifty falls Put Options must increase (go In The Money (ATM)), and if Nifty goes up it has to decrease (go Out of The Money (OTM)).

ATM PE of 8650 Nifty 27-Oct-16 expiry is at:

NIFTY 27-Oct-16 PE 8,650.00 34.65

Now let’s go up and see prices for Put Options (PE). Remember that it has to increase as they become In The Money (ITM). Exact opposite of Call Options (CE) when they move up they become Out of The Money (OTM).

NIFTY 27-Oct-16 PE 8,850.00 174.40
NIFTY 27-Oct-16 PE 8,800.00 131.00
NIFTY 27-Oct-16 PE 8,750.00 90.55
NIFTY 27-Oct-16 PE 8,700.00 57.80
NIFTY 27-Oct-16 PE 8,650.00 34.65

Now let’s go down and see prices for Put Options. Remember that it has to decrease as they become Out of The Money (OTM). Exact opposite of Call Options as they move down they become In The Money (ITM).

NIFTY 27-Oct-16 PE 8,650.00 34.65
NIFTY 27-Oct-16 PE 8,600.00 20.60
NIFTY 27-Oct-16 PE 8,550.00 12.30
NIFTY 27-Oct-16 PE 8,500.00 7.50
NIFTY 27-Oct-16 PE 8,450.00 4.35

I hope after reading this you have understood why option prices increase or decrease as the stock moves up or down.

Tomorrow we will discuss the other factors that influence Option Pricing like Option Time Value and Intrinsic Value.

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Recommended Reading:

Options Greeks Explained – DELTA GAMMA Theta VEGA RHO

Read this carefully if you are speculative trader. You must be seeing today that MindTree Ltd. stock has fallen to its 52 week or one year low. Mindtree shares hit fresh 52-week low of Rs 446.85 today.

In the last one year its highest was 804.50. So almost 50% down. Due to this I am sure if you are not my course subscriber who do not directional trading, you must be doing some directional trading in Mindtree shares.

Since you are doing speculative trading a lot of you who are contrary trades must have bought its shares, or gone long on it in whatever means link Intraday or whatever.

Some who love to follow the so called “Trend Following” would have shorted its shares.

What is Trend Following?

Trend Following is just going by the flow in the direction of the share. For example if the share is falling, just short it. If the stock is looking strong just buy it for the short time. I did it long back but failed miserably.

Later after a lot of research I learned that there in nothing as trend following in stock markets. Can you tell me about your own life seeing your own trend where you will be tomorrow exactly at this time 24 hours later? If you cannot follow your own life’s trend how can you follow a stocks trend on which you do not have any control?

So please stop what is called Trend Following trading and learn the correct way to trade peacefully and protect your capital.

Anyways those who follow trend must have shorted this stock.

My advice is: This is a sure shot way of destroying your wealth through trading, This is also true for Intraday traders. Which Intraday trader trades with more than 10 lakhs on full capital on one stock? None. If you cannot compound your trading money its better you stop trading that strategy.

Trading peacefully and making less money consistently is much better than watching Nifty from 9 am to 3.30 pm and wasting your time.

I still don’t understand why people still love Intraday trading.

My point is stocks such as Mindtree Ltd. are NOT worth trading at all. So please do not do any trades on it.

My Best Wishes are With You.

Disclaimer: This post is for educational purposes only. Please do your own research before investing money in any stock. I do not hold Mindtree shares. Stock market investments are subject to markets risks.

Thank You.

Axis Bank Looking Strong

INDIA VIX at 14.10 not much drop. Nifty also has not moved much.

Directional traders must have lost a lot of money, but since you are a non directional trader you must be in good profits. 🙂

Check your traders and book profits now. If entered Strategy 1, of my conservative options online course 10 days before. Profit should be more than 2%. This is good enough tension free trading and profits.

Axis Bank Looking Strong now you can do the Stock Option Strategy in Axis Bank Today as per the course.

The above email was sent to my subscribers on 21-October-2016 at 11:37 AM.

Within minutes I got a WhatsApp testimonial from my client who booked profit of 2% in 20 days on his trade.

Here is the update:

2% in 20 Days Course Fee Recovered

Those who think this course has value or not here is proof. Within minutes of my email sent to book profits to my paid clients I got a WhatsApp testimonial from a novice trader who kept losing money before doing my course, making 2% profit in 20 days. I am sure since he took the course last month he must have traded with just the minimum capital required so his profit must be Rs.1800/- in 20 days. He paid Rs.6000/- for the course. So how long does it will take him to recover the course fee? Just 40 days more, or full course fee recovered in 2 months or less. Less for those who can trade with more money. Then for the rest of their life they can keep making money.

Here is his WhatsApp screen shot I got just after sending the email today:

WhatsApp Testimonial on 21 October 2016 – Results may vary

Yes these strategies make money for life because they are based on options logic rather than that useless speculations that Nifty will go up so buy a call or Nifty will go down so buy a Put. All those people lose lots of money still not willing to invest in knowledge.

Why did your parents sent you to school? To get knowledge and get a good job. If speculations in trading made money then no one would have sent their children to school only given them 1 lakh to trade and make money. They know very well that it will not happen so send their kids to school. In fact you must be also sending your kids to school for the same reason. But its strange you yourself believe speculations can make money in stock markets. Sorry stock markets do not care for your speculative trades. Every business gives money to people with knowledge. 🙂 Which I think is the right thing.

Winners invest in knowledge and make money, losers keep speculating and keep losing money.

If you are willing to learn and invest in proper knowledge of trading options you are welcome to my course. If you still believe it is speculations that can keep making money – bye. That dream day never comes even for experienced traders.

It feels really nice to keep getting these thank you messages. Please keep them sending.

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