Option Trading - April 2011 (Part II)

Option Trading Call: 29.04.2011: 11.32AM

"BUY nifty call 6000CE/May 11 below 40 for a target of 90. Upon reaching of the target, BUY nifty put 5700PE/May 11 if available below 40. The target for the second part of the trade is 100/120/150."

kadiyali

Option Strategies for Paper Trade - (1)

Hello Friends,

I will be posting in this blog a few strategies for Nifty Options. Members should trade in such strategies only as PAPER TRADE without actually buying the options. My post will be based on actual trades but only in the minimum lot. Here is the first strategy:

"At the beginning of a month, if nifty shows downtrend on a continuous basis, go for OTM calls, and if nifty trades continuously with a positive bias, go for OTM puts. Buy the first lot at price below 35. If the option price goes down further, buy one more lot below 25. If you see the trend further strengthening, go for the option for the next strike rate if available below 45. For example, if you buy 6000CE at below 35, buy one more lot below 25, and if you still find the nifty continuing the trend, go for 5900CE below 45. Once this is done, wait for 6000CE to appreciate to 50, and get out of the 6000CE holding, and make 5900CE free of cost, and hold it for good target of your choice."

The above strategy is illustrated by the following trades:

29.04.2011 - Bought 6000CE one lot at 32.

02.05.2011 - Bought 6000CE one lot at 22.

02.05.2011 - Bought 5900CE one lot at 42. Total Investment Rs 4800.

Once 6000CE touches 50, both lots of this strike rate will be sold, giving the investment back, making 5900CE free of cost. This free option can be held on to a target of 100/150 without any fear of losing capital, since the investment will be already back.

Members are requested only to watch how the above strategy progresses, and get into only paper trades initially till sufficient confidence is gained.

kadiyali/02.05.2011

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Added today two more lots of 5800CE @ 19. Hence the position as on date stands as below:

29.04.2011: Bought 6000CE one lot @ 32.

02.05.2011: Bought 6000CE one lot @ 22.

02.05.2011: Bought 5900CE one lot @ 42.

04.05.2011: Bought 5800CE two lots @ 19. Total Investment Rs 6700.

Let us wait & see how this modified strategy works out.

kadiyali/04.05.2011

Option Trading - April 2011 (Part I)

Hello Friends,

The purpose of this blog is to give one option trading call per month. And here is my first recommendation for April 2011:

Watch Nifty Puts 5700PE/May 2011. It is currently trading at 61. Today's Low is 54.90, and today's High is 68.70.

I will recommend to BUY this Option IF it falls below 40 during next 5 tradings days. Target will be given when I actually give the trading call.

This is only an advance intimation for members to get themselves prepared for a trade.

kadiyali/25.04.2011

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Option Trading Call: 29.04.2011: 11.32AM

BUY nifty 6000CE/May 11 now at 39. Target 90.

NOTE: I had recommended above to buy nifty 5700PE/May 11 if it falls below 40 within 5 trading days. However it did not. But I am confident it will within the next few days. If it has to fall below 40, in that case 6000CE/May 11 will have gone up to 90 from the present 39 level. Hence the above trading recommendation.

The trading call now stands modified as follows:

"BUY nifty 6000CE/May 11 below 40 for a target of 90. Upon reaching of the target, BUY nifty 5700PE/May 11 if available below 40. Target for the second part of the trade is 100/120/150."

kadiyali/29.04.2011

Options Trading Guidelines

Those who would like to follow my recommendations of one option trading call every month, and trade in those calls, should adhere to the following strict guidelines:

1. Allocate a fixed amount for Options Trading, say Rs 10000, preferably out of profits earned by selling shares invested earlier, or out of your savings. Borrowing money to trade in options is a strict NO NO.

2. If you allocate Rs 10000 for the purpose, dont put more than Rs 5000 in any single call. That means even if you dont earn in the first call, you are left with funds to trade in the second call. Beginners may put not more than 30% of the amount allocated in any single call.

3. NO STOP LOSS will be indicated by me. Since the recommendations will be only for OTM calls/puts, money invested will be very small like 3000-5000, and hence no need for having any SL. This means you have to be prepared to get the amount put in Options wiped out totally at the end of the expiry, if the market does not move in the direction of the trading position taken.

4. If due to bad luck, if the amount allocated initially is totally wiped out in 2-3 trades, just get out of the option trading for ever.

5. Target will be indicated whenever I give a recommendation. The call will be like "Buy Nifty 5600PE/May 2010 at 30. Target 150". Those who trade on my calls need not wait for the reaching of the target given by me, and may book profits even before the target, specially during the initial 2-3 trades. The idea is to protect the capital, and add to it by bit by bit in every trade.

6. I will allot one post for every trade/recommendation, and update the progress once in 2 or 3 days. If I recommend any options at a particular rate, prudence calls for buying those options ONLY at rate below my recommended rate, and NOT above the same. Allotment of one post per trade is done with this purpose in mind.

7. Since the option trading is in small amounts, you should ensure that you dont end up paying heavy brokerage on option trades. For any assistance in getting a lower brokerage arrangements, members may contact Mr Jay Sarkar, one of the earliest members of fiftypointsaday blog on his email stockmarketsinindia@gmail.com.

8. If the capital alloted by you for any trade permits you to buy 2 lots of the recommended option, you may buy only one lot at the rate recommended by me, and buy the second lot only at Rs 5 below the recommended rate. If the plan is to buy 3 lots, the third lot may be bought only at Rs 10 below the recommended rate.

I hope by trading in option trading calls given by me, and strictly adhering to the above guidelines, members will be able to slowly and steadily increase their initial capital in the months to come.

Good Luck.

kadiyali.


PS: Those who have any queries on the above guidelines may place their comments.

Full Stop for Paid Service

Hello Friends,

This blog is created to give trading calls in OPTIONS.

It is going to be a free blog for all visitors of my existing blog FIFTYPOINTSADAY.

I will give only one call every month. It will be either nifty option or stock option. The trading call will be only for out of the money calls or puts, and investment will be very much limited, with good scope for appreciation.

Comments section will be open. All readers can place their comments. However I reserve my right to either reply or just ignore.

I will allot only one to two hours every week, and this time will be mostly not in trading hour. Time allotted will be utilised to reply comments of readers. However kindly restrict the queries only on options trading.

I wish you all good luck in option trading through this blog.

kadiyali.