I usually refrain from advising my subscribers from taking any trade for short term as I am a firm believer of non-directional trade. But today I am making an exception. In fact sometimes when the markets are showing indications of good day to trade I will give you some advice which I feel is correct.
It is quite reasonable to understand that it will help people who have taken my course more than who have not. Still it will help everyone to some extent.
Greece Crisis is no small news. A big Euro country may or may not default. We do not know. As a trader I do not speculate. My only friend is Volatility and what may happen to Volatility. Its a guess, but I take a calculated guess.
VIX today (29-June-2015) is currently at 18.18 – a 15.36% increase over previous close. Options premium have exploded. 18.18 is well above average. It is great time for option sellers.
Now let us think like a trader. Tomorrow (Tuesday, 30-June-2015) some news is expected. Once the news is out I expect the volatility to drop. If not tomorrow, within a few days, say by next week it should try to come back to normal. Options premium will also drop benefiting the sellers. This is a great time to do Strategy 1 of my course. You are getting great premium, so you can also go slightly further than whats in the course as we only target a small profit and options premium is also more. So just be safe. Nothing big to worry if something goes wrong Strategy 2 is there. Nifty will not go that far in 60 days. 🙂
Two things may happen:
One,Euro countries will try their best to make sure Greece does not default as it may damage their economy. This is a 80% chance. If the news is good VIX will drop and Nifty will make a bounce back. BOTH will happen. If it does, get out from the strategy 1 as your profits will come very fast. There is no need to wait further.
Two, if Greece defaults then the strategy 1 may or may not hit the stop loss. Remember this time you are pretty far, so if it takes too much time to hit stop loss, you still end up making money. So no need to go to strategy 2. But if there is a small loss, strategy 2 is there to recoup losses. 🙂
Tell me what else can happen?
I hope you got an idea of how I think before I trade. If you become a disciplined trader – this is how you will start thinking. It helps over the long term.
Please remember to manage risk. Just because I have asked you to trade does NOT mean you take too much risk. Only trade with what you can manage.
For those who have not taken the course you can sell options and hedge them by buying further out of the money options. Do not do this on too many lots just because I have said. I cannot elaborate further as this article will come in public domain and will not justify people who have paid for the course.
My costumers who have already traded strategy 1 need not do anything. Just follow the rules. Increasing risk is not recommended. However if you have cash left to trade a few lots you can try making another Strategy 1 in 1 or 2 lots only.
Disclaimer: In this post I have suggest my newsletter subscribers and customers a good trade and a great time to trade according to my view and experience. If you are reading this after the Greece news is out PLEASE DO NOT TAKE THIS TRADE. VIX will change and we will have to try some other strategy. Please do your own research before trying any strategy. Stock markets investments are subject to markets risks so please trade with care. Trade with the amount you can manage well. Thanks.
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Comments on this entry are closed.
Hello Dilip ji,
Please tell me how can I save my brokerage because even if I hedge my position by another option/future/stock, I may end up with some minimum profit. However, I need to pay brokerage four times (one buy & sell, second buy & sell). Though, I am not making any loss till date, but I got very minimum profit. For example, by investing Rs 40,000/- four times in NIFTY options, I earned 25,000/- but paid Rs 20,000 brokerages. What can be a potential solution that can be provided by your course for “OPTION”? Please advise.
Ajay ji,
Yes in options trading its very important that you pay very low brokerage so that even if small you end up making the profits not your broker.
Today, just like in the US, discount brokers are popping up in almost every city. And due to possibility of online trading and call and trade, its not even important that the broker has office in your city.
Please search Google for “discount brokers in India” and you will get many.
Do your own research and finalize one or two. Call them or email and chose the one who you think will solve your purpose.
Opening account is easy as well as most things can be done online or through a courier service.
Remember with discount brokers you will pay less than Rs. 20/- per trade (not per lot).
Some names of discount brokers in India – Zerodha.com, sasonline.in, rksv.in etc.
But please do your own research as well.
Hope I was able to solve your issue.
Thanks.