Nifty has continued its downfall. Some people have reported stop loss in strategy 1. In that case there is no point in waiting and hoping for a recovery. See the document – if according to rule you have to go to strategy 2 then go. Stick to discipline.

If the loss is less around 10 points only – there is no need to go to strategy 2 – just close your current strategy 1 and get into a more comfortable position.

Some people are telling me that OI (open interest) is most in the 7700 Puts.

You can see OI (open interest) here:
http://www.nseindia.com/products/content/equities/equities/oi_spurts.htm
After reaching there click on “By Contracts”.

If you do not know what an open interest is then in short its the total number of open (or not closed) contracts. So basically right now (at this moment only) on the 7700 strike there are more number of open options & futures trades open than on any other strike.

But the fact is, it is AS OF NOW. This may change in 1 hour. In that case what you do? Do you close your trade and again re-enter because what open interest is telling you? This in my book not a great way to trade.

Fact is open interest does not work. When it works traders think that open interest did the trick, when it doesn’t they blame on other factors.

More open interest means the market is expecting that Nifty will not break 7700 or even if it breaks – on expiry it will be above 7700 PE.

Also note that I checked 1 hour before it was around 1 lakh+, now reduced to some 78,000+. Please bear in mind that OI will keep changing, which means basically you have to keep a tab on it. This is where I am not comfortable and rather stick to discipline.

Well frankly no one knows what will happen on Monday – a gap up or a gap down? Therefore I would rather stick to discipline than go with the open interest. The point is if it breaks 7700 then the losses will accumulate pretty fast as 7700 will become ITM (In The Money) and delta of 7700 will become greater than .50. This situation must be avoided.

Of course if you listened to me and got into a more comfortable position after the Bihar elections then I am sure stop loss is not hit and you are safe.

In that case stay put and wait. No need to panic.

Thank You: I think I got more than 100 wishes from you all on Diwali day. Really means a lot. Overwhelming Joy seeing your wishes. 🙂 Your trust on me gives a lot of satisfaction and motivation, especially in an industry where there is lack of trust on tips providers. Some messages were very interesting and some very motivating.

Thank You All once again for the lovely messages. Will upload some of them in my blog. Of course your phone no or emails will be hidden. I take confidentiality of your personal information VERY seriously.

Today on Diwali day the stock markets will open only for Muhurat Trading.

These are the timings:

5.30 pm to 6.45 pm – Equity & F&O (NSE, BSE, MCX-SX)
5.45 pm to 7.45 pm – Commodity (MCX)

Intraday positions will get automatically squared up around 6.30 pm.

Why You Should Not Trade on Muhurat Trading

My sincere advice is please do not trade on Muhurat Trading. You have just one hour and at least Intraday it does not makes sense. Plus people celebrating the occasion have a lot of things lined up for the evening – Lighting Diyas, Laxmi Puja and Burning Crackers. And of course lovely food. 😛 Obviously your minds will be there and you will not be able to trade peacefully.

So its better do not even open the trading app or your TV to look at whats happening in the markets.

But I know there are some people who will do some trade on this day as they feel its auspicious to do trading on Diwali day.

Well when investments are concerned its your knowledge that brings returns not the day or time when you are trading.

Muhurat Trading Tip 2015

Still if you are forced to trade then I would suggest start buying Sun Pharmaceutical Industries Ltd in stages like some today, some after a decline of 10% and some after a decline of 20% from here. Its looking very strong at 726.00. Its now at 52 week low as well. A very strong company. Though it is having some issues right now, they are short term and the stock will recover very fast when the management will solve those issues. The stock should give you good returns within a few months – but please do not invest a lot, and, invest in stages. If the stock goes down 10% more from here buy more. Or if the stock goes up 10-12% sell and book your profits.

Note: The stock gave a return of 10% in 45 days and I emailed my subscribers on December 28, 2015 to exit the stock when it closed at 790.85. Next day the stock opened over 801 for trading and my subscribers made a profit of more than 10% in 45 days. Please note that the profits may have come earlier, but stock markets investing should be done with proper research and proper money management rules must be followed.

Another good stock is HDFC Bank Ltd. Its looking very strong at 1050 levels. A very strong company – actually an evergreen company and a heavy weight stock. Please note that there can be issues with this company in future like NPA (Non-performing asset is defined as a credit facility in respect of which the interest and/or installment of Bond finance principal has remained ‘past due’ for a specified period of time. NPA is used by financial institutions that refer to loans that are in jeopardy of default the so called NPL), bad loans (loans that cannot be recovered), some management issues etc, but I am sure with time this stock will prove to be a great stock to invest therefore invest in stages not at one go.

Update on 07-Nov-2018 (Diwali Day) – Let us see how this stock has performed over the last three years:

HDFC Bank Nov 2015 – Nov 2018

Closed at 1946.55 on 6-Nov-2018 – this is a return of ((1947-1050)/1050)*100 = 85.43% in just three years.

HDFC Bank 06-Nov-2018

Hope you made good money in this stock. 🙂

Here is Wishing You All and Your Family A Very Happy Diwali 2015, and a Prosperous New Year.

TheOptionCourse Muhurat Trading Happy Diwali 2015

Disclaimer: Stock market investment is subject to market risk so please do through research yourself before investing in any stock even if the recommendation is coming from me or anyone else. This investment is proposed for a long term and not short term, therefore please invest with the money which you will not need for at least 1 year.

Here are some of the Happy Diwali 2015 Wishes from my customers. Thank You so Much for believing in me and wishing me. I hope your next Diwali is even brighter. (Please note that the signal is missing in images because my mobile got corrupted and these are snapshot from my mobile with a non-working SIM. I had changed my mobile by then.)

This email was sent to my subscribers on NOVEMBER 9, 2015. If you want to receive such newsletters please subscribe at the bottom of this page.

Please refer my email dated NOVEMBER 2, 2015 titled: Bihar Election What To Trade. You can read it here.

With respect to the Bihar elections I kept sending newsletters as a reminder to help my paid subscribers book profits.

This email was sent on NOVEMBER 6, 2015:

Sorry for sending this email late. Was really busy. 🙁

Looks like VIX has started to fall because exit poll results are out. Its 19.28 now.

Those who are aggressive traders can sell ATM options now. On Monday VIX will surely drop more than 9% so you can immediately book profits and exit. Only issue will be a big move. For that you can buy some OTM options.

People who have done my course, hope you have entered Strategy 1. If not, do it today before markets close.

====== END ======

Then on NOVEMBER 7, 2015, I sent a newsletter again as a reminder:

(This email is for my paid customers only.)

If you are in strategy 1 read this:

The VIX will drop – but movement may come so here is the trick to make a profit:

By 9.30 exit the trade in profits (whatever it is) and get into new strategy 1 with a more comfortable position.

You can get into a new one by 1 pm when Nifty will have moved and will be where it is suppose to be for normal trading.

Hope it helps.

Enjoy the Profits and send testimonials.

Many Thanks For Being My Customer and/or Subscriber.

I will send reminder again on Monday morning.

====== END ======

Then yesterday I sent this newsletter again so that they remember to book profits:

If you are on strategy 1 remember that VIX will drop and it’s better to get out early morning to take benefit if premiums drop. You may re-enter later in the day or as written in the course.

Basically I do not want to take losses in hope of better return which I am getting now. Even though my profits are small – it’s at least a profit – better to take it now rather than take a loss later.

The problem is there can be movement and since it looks like NDA has lost in Bihar – we can only guess that Nifty will open Gap down and MAY continue to keep going down through the day.

Well again this is a calculated guess – it may well go wrong. But this one is for sure VIX will drop so benefit from that and later get into a more comfortable position.

====== END ======

I was correct on one thing and wrong on another.

I was correct here:

“On 6th November I had written that “Looks like VIX started to fall because exit poll results are out. Its 19.28 now. Those who are aggressive traders can sell ATM options now. On Monday VIX will surely drop more than 9% so you can immediately book profits and exit.”

Well at the time of writing this NDIA VIX is 17.46 – a 2.01 points drop from previous close which is -10.32% drop.

And wrong here in my newsletter sent yesterday NOVEMBER 8, 2015:

“The problem is there can be movement and since it looks like NDA has lost in Bihar – we can only guess that Nifty will open Gap down and MAY continue to keep going down through the day.”

Well it looks like Nifty is actually recovering. Its ok as VIX is our main friend/enemy, not movement. VIX dropped and we made a profit that’s what matters to us.

Hope you have booked profit. If not please do so and enter into a new strategy 1. VIX is still good at 17+. The option premiums are fine.

Those who took my course recently are also reporting profits. Here is one WhatsApp message I got today morning by one of my paid subscribers. Well I am in hurry to send this newsletter so will post the screen-shot later in some other post.

“GM Sir. I had received your strategy on 4th Nov. Read it. Did 1 lot trade on 5th Nov and added 40 lots on Friday (6th Nov). Margin used was 15 Lakhs. As we pay only SPAN margin. Squared up today at 10.16 am for a profit of Rs. 39,000/-. Thank You Sir.”

That’s a profit of 2.6% in 3 days.

He paid only 5000/- to get the course and in less than 3 days makes 39,000/-. This is the kind of results I want to see. Its nice to read testimonials like these really.

I repeat again: VIX has dropped as predicted and the strategy 1 must be in profits. Please book profits whatever you are making and get into new and comfortable strategy 1.
Hope you are enjoying my newsletters.

Learn Conservative Options Trading and Create Wealth Overtime:
http://www.theoptioncourse.com/learn-how-to-trade-options-for-monthly-income/
Read 60+ testimonials in these pages:
Here:
http://www.theoptioncourse.com/what-traders-say-about-this-course/
And here:
http://www.theoptioncourse.com/dilip-shaw-course-testimonial-page-2/
And here:
http://www.theoptioncourse.com/dilip-shaw-course-testimonials-page-3/
And here:
http://www.theoptioncourse.com/what-people-say-just-after-taking-my-course/

And 50+ testimonials are still waiting in queue 🙂 . Frankly I do not find time to add them. 🙂 🙂

You can pay online here:
http://www.theoptioncourse.com/bank-details/

Work hard and invest in knowledge. That’s the only way to create wealth trading options. Thank You.

People who are smart traders will always keep making money irrespective of what happens to the markets.

After almost 1 year of offering the option course, I have found that some of my customers are smarter than me. I have no problems admitting that. This in fact is quite natural. Students doing better than their teachers is very normal. One reason could be my conservative nature that you can see in the below chat as well. 🙂 After suffering huge losses initially I do not want to take any more chances.

Some of the smart traders do my course and end up making more than 3% per trade (not per month) especially from the directional strategy. These trades can last for about a week or so. If done correctly imagine the kind of returns it can make. I feel very happy when a smart trader emails me their success. 🙂

Look at the WhastApp message I got from a client who did my course early October, 2015:

Testimonial by Mr. Krishna – Results may vary for users

When asked about the trade, this is what he said in his email:

Hello Dilip,

After a long time, I had a profitable trade with low pressure on my mind, took trade as per the directional strategy from your course.

I had taken similar position couple of months back but had lost money. What I learned was when the expiry is near; it may not make sense to take the position as it had lead to losses.

The above was the precursor for taking the current position, taken on 20th October, details as under:
* Bought one lot of November Nifty Future @8,317.
* Rest of the Details of the Trade Edited as this will go in public domain and is part of my course *

I squared off my positions today (i.e. on 30th of October):
* Nifty future: 8083 – 8317 = -234 points; loss of Rs.17,550/-
* Rest of the Details of the Trade Edited as this will go in public domain and is part of my course – however he made profit here in options, beating the losses in Futures * 🙂

Summing up both credits, the overall profit from this trade is Rs.3,375/-. 60000 INR was blocked by the broker for this trade. I made a neat profit of 5.6%.

This was probably one of the best trades in the whole of my 4 years of trading career. Very low pressure about potential loss and made decent profits.

Thank you for the course and the constant guidance and support.

Wish you good luck!

Regards,
Krishna

Trading Without Stress is Important to be a Smart Trader

You know what makes me more happy in the above email? This sentence – “This was probably one of the best trades in the whole of my 4 years of trading career. Very low pressure about potential loss and made decent profits.”

Read that again – very low pressure about potential loss. This is extremely important. If you are trading and stressed about the trades what do you think will be the outcome? Obviously a stressed result: losses or minuscule profits which you know very well that, it will go away the next trade.

I get many success messages in my WhatsApp/email. Some call me to thank. Most I do not share with you but this one is different. Why? Because this trader DID NOT copy my directional trade. He is a smart trader – he changed the option strikes as per the VIX and other parameters and made a good profit.

Smart Traders Think About Losses First, Then The Profits

In trading business one who is trading smartly is the one who will make money – and smart traders DO NOT speculate. The first thing that’s there in their mind is “what if this trade turns into losses?”

Agreed this is a very negative way of thinking but this is what works in this business.

Smart Traders Hedge

Obviously when you start worrying about the losses you will hedge your trades and not leave it naked, just because you think the losses will not happen. Well the stock will not move in that direction because you think so. It will move in that direction because most people think so and there in no way to find what most people think. Stocks don’t have emotions – so if they have to fall 25% in one day they will – and you cannot blame them if you need to sell your house to pay the losses. The stock will in fact ask you back – why you did not hedge when you had options? You will not have any reply.

This does not mean you should never trade them – it only means what have you done to protect your losses? Lets look at my Axis bank trade. The call was given when it was 484 – in couple of days it went to 468-470 and now today back to 482. A naked Future buyer may had taken a stop loss only to see the stock bounce back. But my customers are still in the trade because their money is protected. They will take out profits when it comes – that’s the beauty of hedging.

On top of that if you can take my strategy and use it in a better way then you can make even better returns. Some hard work on your part is required.

I can show you the direction – the strategy – but the path has to be traveled by you. So start thinking differently – start using your brains to get a better return.

Smart Traders Think Differently

My simple advice if you have taken my course is to start using your brains now. After 2-3 months of practicing you must start thinking differently on how to make it better and snatch a better return.

Smart traders like Mr. Krishna and Mr. Inder do not copy paste the strategies especially the directional – but think before trading. The results are for you to see.

Do not just copy the strike prices given in the course but change them according to the risk in the trade, option premiums and your view with respect to that particular trade. Practice it with one lot and see how it works. Next time when you trade, change the strike price according to your view and see if you can get a better return.

Smart Traders Experiment, But Know That If It Doesn’t Work They Can Always Go Back to What Worked

In the worst case scenario if it’s not working as per your wishes, then of course you can come back to the original strikes. Nothing is lost as you traded with one lot or you can always paper trade.

Smart Traders Paper Trade A Lot

Do you know you can do thousands of paper trade in a year? No power on this earth can stop you from paper trading. And you don’t pay a dime to your broker for that neither you need any cash to trade thousands of lots on paper. 🙂

BTW when I used to research on paper (I still do), I always traded with 1000 shares (not lots shares) irrespective of the stock – so that profits or losses can be multiplied by 1000 and I get a significant number to see. If you lose only Rs. 100 in a trade on paper you will feel that that the strategy is good except it needs a small change. Fact is if you trade with 1000 shares you get a different figure and of course the way you think after the result will be different.

Smart traders will almost always come out winner. See even if they make 2% per trade and if this comes in 10 days – we are talking about 6% or more return a month.

Let me be very frank – the results will differ from trader to trader, but mostly people who use their brains and not copy paste the strategies are the ones who will almost always make more. You have to know what works best for you – that’s the ultimate in option trading research.

Smart Traders Do Not Listen To What Others Say

For example if you are comfortable in Future trading then do not stop trading Futures just because someone told you that something else works better. Try the best possible hedges on that and see how you can manage them. This advice is applicable to everyone irrespective of whether you have taken my course or not.

Let me talk about the non-directional strategy. This is for people who have done my course. Have you ever tried to make more from the non directional? I mean changing the strike prices according to VIX or pending news etc. Have you ever tried that?

You see we are totally hedged. When the losses are limited why not try to make more while still making sure that the trades are fully hedged.

Do not change the essentials but you can always experiment to see what works best for you.

And of course send me testimonials. 🙂 The happiness I get by seeing you succeed is unparalleled.

Just one testimonial and I got motivated to write a 1500+ word article. Keep them coming – makes me very happy.

This was a comment by Mr. Sunando – one of my blog’s avid readers. It was so relevant I shifted it to main article – because few people read comments:

Its necessary to be smart as a trader to acquire the winning trades having mostly the institutions as main opponents. We can’t move the market a single paise with our money and buy sells. We can just follow the market, and being smart is the main thing to get emerged as a winner.

Some of us learn this fast some delayed and some never.

Whatever written by you above including hedging, adopting a simple plan with no deviation (holy grail never exists) and executing the same with consistent consistency is all.

A clear mind with simple calculation skill can make trades a success. We are here not to donate money to the market , rather acquire.

Golden two rules says :
1) Don’t loose money
2) Don’t forget rule number 1.

So hedge and win. Calculate the return in % – control your mind and be happy beating the bank rate in double/triple, cumulate the capital year after year.

Finally I end with a quote by Michael Marcus (sent on my WhatsApp by Mr. Kirank another avid reader of my blog):

“The best trades are the one which are in synchronization of three aspects which are Fundamentals, Technicals and Market tone.”

Thanks.

Note: Update to Bihar elections results and profit booking is here:

http://www.theoptioncourse.com/india-vix-dropped-book-profits/

Bihar elections are going on. This may impact the options volatility and we can benefit from it.

At today’s close INDIA VIX is 19.48 up by 1.60, or 8.95% up from previous close.

You can see it here:

http://www.moneycontrol.com/indian-indices/india-vix-36.html

I assume this will increase till this Friday, 6th of November, 2015. I think will go up to 21 or 22 and then fall. Since counting is on Sunday, 8th of November, 2015 – VIX will fall drastically on Monday by the time results are out. From Monday it will keep falling until it stabilizes to 16-17 levels.

Trading The VIX

Some of my readers trade the VIX itself. Well if you don’t know VIX can be traded in India. You can trade only Futures by the way as of now. So if you are risk averse please do not trade VIX as it cannot be hedged directly. Well it can be hedged with equity cash holdings or options of Index – but its out of scope of this article.

You can find about trading the India VIX here and here.

VIX trading if done right can make a lot of money, but let me warn you its very risky as well. One lot is valued approx 10 lakhs and you can see how it fluctuates in one day. 8% fluctuation means you make or lose 80,000 in one day on one lot only. So think before you start thinking of trading the VIX. 🙂

Right now I don’t think retail traders are trading it, but the institutional investors and high net worth individuals do. If you are one of them please tell about your experiences in the comments section.

What to Trade Tomorrow till Bihar Election Results Are Out?

If you have bought my course:

Trade the directional strategy on Nifty. Remember the option prices will not decrease soon so even if the Future direction is wrong – the options will make more than Future losses. And of course if you are correct on Futures you make money anyways. 🙂

When to exit: Any time you are making a 3% profit on margin blocked. Number of days to stay is NOT important. But the maximum time you can be in the trade is until markets closes for trading on Monday – 9th of November, 2015.

After that VIX will start dropping which is not good for the directional strategy. Trade like a pro – exit and look for another opportunity.

If you have not bought my course:

Well why should I tell you? 🙂 Just joking. The easiest trade when VIX is increasing is to buy options. Well buy both the Calls and Puts. Buy tomorrow 3rd November and exit on Friday 9th November. Hope for a movement and VIX not dropping. Well VIX will not drop at least till the results are out. Sometimes it may drop slightly after the exit poll survey results are out by the media. But that may happen only on Friday.

When to exit? When you are making a profit of 10% on margin blocked. Why not at 3% which I always advise? Well the trades and the objective of the trades are different. Basically buyers are losers – so when there is a chance to make – take at least 10% home of margin blocked.

Of course you have to close your trades on Friday whether you make a profit or not as after that its almost guaranteed that VIX will drop and you can lose a lot of money. Trade with a plan and the plan is to exit the trade when VIX has started to drop. Believe me after that even if a movement comes – your trade will still make a loss as VIX will drop and the theta will also take a toll on the premiums – remember 5-6 days would have already passed. Options love to lose value as fast as they can. So enter tomorrow and exit this Friday.

Important note: When buying options risk management is very important as 100% of the margin money can be lost. Though chances of losing all money is next to nil as you are staying in the trade only till Friday – still see how much worth of options you can buy. Do not buy more than that.

What to Trade On Monday After The Bihar Election Results Are Out?

If you have bought my course:

If you do not want to trade the directional strategy then take the non-directional trade on 5th or 6th when VIX will be the highest. The profits will come in few days. You should be able to make good profits within a few days because next week VIX should keep dropping. And I really do not think very huge movements will come. Even if it comes dropping volatility will help us.

Rest you know when to take profits out.

If you have not bought my course:

Of course these are the best time to sell options, but the unlimited loss risk is always there. So trade with caution.

You can take my course and learn the best methods of hedging and trading virtually stress-free. Not only will you trade worry-free but you will start making profits.

Click here to learn more about my course.

Note: Update to Bihar elections results and profit booking is here:

http://www.theoptioncourse.com/india-vix-dropped-book-profits/

For retails investors its better to avoid IPOs forever. When there are thousands of great companies to choose from why invest your money in an IPO?

Let me start with this – after the losses in the DLF IPO and the SHIPPING CORPORATION OF INDIA Ltd. IPO – I was done with IPOs. I mean I took a permanent decision NEVER to invest in an IPO. And that stands even today.

There are a lots of reasons why you should not invest in an IPO.

I have listed 8 reasons why you should not invest in an IPO.

1. Premium Just Too High: The company may be doing great (just like DLF) so they will price in the cost as premium in the IPO. Poor investors pays the premium to participate in IPO only to realize that the information they got from the company was fabricated. Read this to know SEBI penalized DLF for hiding information in their offer letter of IPO.

2. No Guarantee of Listing Above Premium: Like I said IPOs do not come for free – investors have to pay a premium. Once they pay a premium there is no guarantee that the IPO will list above that. Barring few, most IPOs actually list below their offer price level. And again its the retail investors who sell to limit losses on the listing day.

3. No History of the Company: Its tough to analyze a stock of an existing company – but at least you can see last one year low and high, moving averages etc. But with an IPO there is no history to analyze. The only thing we have is the offer prospectus. Just believe whats written there and invest. This is not correct way to invest.

4. Listing Day Trading: On the listing day the stock does not behave normally. Almost 80% of the investors are either looking to book profits or take out loss. This is risky. On that day again the retail traders lose money to big investors. How? You will see that as soon as the stock opens for trading on the listing day it opens way above the listing price – at that time its the institutional investors who are able to sell and book huge profits. Retail investors are busy traveling to their workplace or have totally forgotten about the IPO. The ones who buy it as soon as the markets open for trading are the Intraday trades looking for a quick profit. Alas their money just goes away to the institutional investors. Now by the time retail investors come into action – the stock may already be trading way below the offer price. Ruing their decision not been able to book profits – they either wait for a better price or sell at a loss. Intraday trades gifted cash to institutional investors and close their trade. 🙂

And for those retail investors who were not willing to sell at a loss – their wait sometimes goes on for years and still they do not even get their break even price.

See the image – DLF still trading below its listing price even after 8 years. See this:

Source: moneycontrol.com

5. No Clear Reason For the Premium: I have never seen any company coming with an IPO giving clear reasons as to why they have offered such a price. They create a hype by means of advertisements and when the hype is generated – depending on the kind of hype a price band is reached at. Well I may be wrong but this is what my experience says. If anyone has any knowledge of how the offer price is reached at please share in the comments section or email me. But I have not seen a single IPO in the last few years offering a reasonable offer price. All are offered at least 20-25% more than what they deserved to be priced. But since its almost certain they will get the money they are asking from the market – such an offer is given.

I block-quote this from investopedia.com:

For many investors, the only real exposure they have to the IPO process occurs a few weeks prior to the IPO, when media sources inform the public. How a company gets valued at a particular share price is relatively unknown, except to the investment bankers involved and those serious investors who are willing to pour over registration documents for a glimpse at the company’s financial.

So basically create a media hype – offer a highly priced IPO – extract money from general public – and NEVER return their money – how easy.

Then money travels from one shareholder to another – the company keeps the billions of cash for ever.

6. Small Offer Makes Small Money: And this one is perhaps the most important point why people like me and you should never invest in IPO. See retail investors get 30-35% of shares. So the maximum application size cannot exceed 100,000 to 200,000 per investor. Even if you go for the maximum size you will be only allotted 30,000 – 40,000 worth of shares. Assuming you get lucky on listing day and were able to sell at a 10% profit. You make anywhere between 3000-4000 in about a month. Can Rs. 3000 really make a difference to your life? Think about it what can you do with Rs. 3000? Nothing really. Why then take the hassle of investing in IPO?

7. All Money Blocked: If you apply for maximum allotted shares for retail investors – you will have to part with all the cash for a few days until you are allotted the shares. The cash that was unused will be refunded back to you. The whole process will take about a month. And there you are, really worried about your 1 lakh 70 thousands in the hands of the underwrites of the IPOs (the brokers like Karvy etc.). Now days at least its all online but just a few years back they used to courier the checks. Now what if the courier doesn’t reach? What if there is a spelling error in the check. Send the check back by courier, write an application, wait for another month for the courier to arrive. Do not sleep well to get back your own money. And people who don’t have an online Demat account still have to go through these ordeals I think. But I am sure its all finished now thankfully.

8. Stocks Not Arriving: You know what. When I applied for DLF IPO I got some stocks worth Rs. 15,000. And to my horror the stocks NEVER arrived in my Demat account due to some “technical mistake”. If I remember I was running from pillar to post on the listing day to get “my” shares which I had already paid for to be in my trading account. Yes three applications and a waiting period of 7-10 days. And the worst part I applied online through my broker. If you think online things can’t go wrong – then you are wrong. Well anything can happen. I still cannot forget that ordeal because by the time I got the DLF shares in my account it was trading well below the offer price. DLF if you remember opened bumper on the listing day and then after a few days still biting dust.

In view of the above I request you to NEVER EVER subscribe to an IPO. When you can always buy the same companies shares later why go through all the hassles of an IPO?

That’s the reason I sent you an email to stay away from Interglobe Aviation Limited (IndiGo) IPO.

Tell this to your kids as well and your friends. We have enough companies in our hands to trade. Let others participate, you stay away.

Many thanks for reading this really long post. Please share your IPO experiences in the comments section below. Will really make for an interesting read for all of us.

Thanks.

Axis bank is now looking attractive. 484 is really good. I assume it should give a 10% return soon.

If you have taken my course:

Go for directional strategy for next month. Go for Future buy. The rest you know – it cannot be revealed here as this newsletter goes to all paid as well as non-paid members.

If Future is in profit great – we make money. If not then the options will make. Here is the asset quality news:
http://www.moneycontrol.com/news/buzzing-stocks/axis-bank-tanks-7asset-quality-analysts-still-bullish_3824081.html

So there is going to be some volatility I assume. And we make money if the stock is volatile – the direction does not matter.
Wait for at least 5% up or down to book profits. The more it goes up or down the better.

Now if the stock falls 5% or more. Close your trade in profits and BUY the stock in cash. 🙂

And sell when stock is up 10%. Make profits everywhere. 🙂

If you have not taken my course:

Just buy the stock in stages please. Do NOT buy in bulk at once. Learn to manage risk and buy with the cash that you can afford. Do not sell in loss. Average at 10% down. When you are buying a stock in cash your only aim should be to make more than 10% in a year. That’s good in my books. Axis bank will give that.

Divide the cash in three: Step one: buy now. Step two: add more at 435. Step three: add more at 392.

DO NOT buy more. Your sell will be at 10% above your average.

Thanks.

Part of newsletter sent to my subscribers today. If you want to receive such newsletters please subscribe your email. Form is available just below this article. Thanks.

Currently I am writing an article on why you should not invest in an IPO. However its taking longer time than expected.

In view of the upcoming IndiGo’s parent “InterGlobe Aviation” IPO – I had to send this email in a hurry.

Please DO NOT subscribe to this IPO.

DO NOT Buy IndiGo IPO as the company recently paid huge dividends to its owners just before IPO – it is not a good sign.

In any case subscribing to an IPO is a bad investment idea for retail investors. But I am sure many of you must be interested in this IPO as IndiGo is a profit making company.

Remember that DLF was also making huge profits when it came with its IPO – but see how it performed after the IPO. Still languishing.

If you really want to buy IndiGo share its better to wait for the IPO to be over and after couple of months you can take a decision on whether to buy or not from the open market. By that time you will get an idea of how the stock is performing, but please do not buy shares in its IPO.

Couple of months is also a very small time frame – but still its better than investing in IPO.

Let market decide the correct price in a few months after the IPO then buy/don’t buy IndiGo’s shares – but for now just DO NOT subscribe to its IPO.

Thanks.

When stock markets are stable its much better to short options than to buy even though VIX is low.

India VIX fell sharp today by 5.75% and closed at 18.02.

I have a feeling that stability that we were looking for since the last two months has come. In that last few weeks a 1% or more movement was very common. One day up next day down – very frustrating for buyers as well as sellers. When markets are stable traders can do some planning, but when its not, there is no plan. Every time you take a trade stop loss is hit. Buyers take a stop loss one day, next day its turn of the sellers. Stable markets are best for option traders especially the sellers. We will shortly know why.

VIX Was Just Not Falling

This again is very uncomfortable situation for buyers. When you have VIX above 20, you just pay too much as premium of options. In my view its not justified. If you are buyer and not comfortable paying a big amount for premium – just don’t bother trading. No one is forcing you to trade. I do not trade if I am not comfortable with option premiums. Whether buying or selling, if I am not comfortable with a trade I will not trade. That’s it.

VIX was not falling because of multiple reasons, but the main reason was no clear solution of China issue. Now that its over and markets have got some good news, we may look forward to a stable market at least for a couple of months.

Look at the image below:

India VIX Last Six Months Graph (source moneycontrol.com)

Can you see how VIX behaved since 24-Aug-15 (the day China slowdown news broke out and Nifty fell 6%) till 24-Sep-15? Before that VIX was averaging 15. People who took my course made good money all this month until 24th Aug struck (some people made good money even on a fall) and we were on our toes for about a month. Now again the clouds have cleared and its time to make money.

Since we are properly hedged, these troubles look small and eat only a portion of our profits. Look this is traders life and some months will not be good. You have to accept that and move one. But we have to make sure those losses DO NOT eat away months of our profits. That’s the reason my course teaches to hedge. You never know when it will work. 🙂

Here is a peace of advice: If you can identify these troublesome months and stay away from trading your returns can be amazing in a year. I agree though its very hard not to trade and also identify the troublesome months – but if you can stay away from these volatile months it will be great for your account.

VIX is a great indicator of trouble in markets. Hope you remember I sent a warning message on September 1, 2015 when VIX crossed 30 and I asked all of you to halt trading.

During volatile times the directional trades works best. Those who traded made money.

VIX Was High, Did Option Buyers Make Money?

I feel now VIX will come down and get stable. Because historically Indexes are suppose to trade in range 80% of the times thus favoring the sellers. Yep 20% the times the markets have to favor the buyers for poetic justice, but I seriously doubt last 1 and a half month buyers made any money. If you are an option buyer please be honest and let us know in the comment section if you made money last few weeks. If yes, was it significant like above 30% of capital traded? If no this was your best time to make money and if you failed during these times too, then Good Luck more though times ahead.

Important Advice For Option Buyers

August to September 2015 were buyers months. If you were unable to make money buying options during these months – then I bet you cannot make money buying options. Close your account and keep them in some liquid fund. Now VIX and Nifty are getting stable and it will be even more difficult for you to make money. Please do not mind the practical advise. I am trying to save your money and its for you to decide.

So Should You Sell Options Next Couple Of Months?

With trading there is no guarantee, but when markets are stable its more sensible to short options with protection. When markets are stable the theta of options will eat the premium of options as time passes and you can exit with profits. Of course trading non-directional is even better as we don’t even need to predict direction – its the job of the buyers not sellers.

Well my course teaches the best possible way to trade non-directional, but its for you to decide if its worth it.