WHY TO BE CAUTIOUS WHILE TRADING IN BUDGET 1 FEB 2022

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Investors should trade with caution till the Union Budget 2022-23 is presented on February 1, 2022. The word of caution comes after the strong market rally finally came to an end last Friday when both benchmark indices falling sharply since last week. Nifty index is trading below 17100 mark, While the sensex is near 58000 mark. Market is currently witnessing higher levels of nervousness due to the upcoming budget. Not just the Union Budget 2022 but markets are also expected to remain volatile due to monthly derivative expiry as well i.e. on 27 January 2022. The volatility has spiked further due to the ongoing earnings seasons. While there are many external factors that will also weigh the market in coming session, the nervousness ahead of the budget could lead to some sudden selloffs, leading to further correction. In such a scenario, traders and investors should remain cautious over the next few days, especially on the day when Union Budget 2022-2023 is presented. Markets are riding on optimism at the moment and much of it is due to the high expectations from the upcoming budget. Generally, the market does not give any major trend reversal ahead of the mega event; but this time, it looks like we are going to witness yet another unprecedented behavior of the market. Next couple of days would be quite crucial and would be interesting to see whether markets correct further or it shows some resilience to protect it is crucial supports 17000. Going by the developments witnessed in the last five trading sessions, a number of analysts indicate that the market may correct further in the near-term. Technically, Nifty has started to form lower top, lower bottom and is witnessing profit booking declines from five sessions. It also formed a Bearish candle on the daily scale. Now, till it remains below 17100, weakness could be seen towards 17000-16500 levels while on the upside key hurdle exists at 17700-18200levels. We expect a short-term but sharp correction in the market if these expectations are not fulfilled.

For Option Callput Derivative traders :-

If you are an option trader then you have to be more cautious while trading in budget 2022. As we all knows its pre-budget days so already options premiums are higher for February 2022 settlement. In the budget session some major movement comes only if budget gives big surprise or huge disappointment bigger are chances of your losing money Market is smarter than most of us and it factors in obvious things. If you are taking some call option or put option check the risk in those particular positions. Check the risk factor i.e. how much risk you are willing to take, but that’s not enough you need to see the VIX and how much potential the script have. People do that depending upon how much risk you are willing to take If you take deep ITM call the capital blocked and risk can be too high for you to handle. If you buy Far OTM call then also you may lose all capital. For buying any option call or put and strike rate you need to have an opinion on the stock which should be based on Technical Research. Also time value is very important factor in option buying. As time lapses in series you can move more towards ITM from OTM.