Gold no longer a safe heaven – A major shift from precious metal to “Just a commodity”

Keep converting your useless physical Gold inventory to different asset classes or just cash

“The mind is its own place, and in itself can make a heaven of hell, a hell of heaven.”Nature created human and human destroying nature, that’s a bitter truth we are all living with . We often see documentaries, news articles, presentations or activities/movements to save nature , or just to spread awareness.“Mount Everest” – highest peak of Himalaya , once unconquered and considered invincible. One gentleman from New Zealand , Sir Edmund Percival Hillary reached the peak for the first time and opened the gate of a new destruction In ancient history, this precious metal , which was far from the reach of common people, was found only in possession of Emperors ....

TIME DECAY IN OPTION

The ratio of the change in an option's price to the decrease in time to expiration. Since options are wasting assets, their value declines over time. As an option approaches its expiry date without being in the money, its time value declines because the probability of that option being profitable is reduced. Time decay is a crucial component traders consider when deciding when/where to buy sell options.....

IMPACT OF RISING DOLLAR ON ECONOMY

All eyes are on the rupee which has fallen in value against the US dollar. It has racked up macroeconomic issues concerning the slow economic growth, corporate earnings and market volatility. It is the common man who is going to hit the most.The falling rupee and the rising dollar can be translated into more expensive foreign holidays, educations or products. 

The Fast Moving Consumer Goods like soaps and shampoos require imported raw material. The cost pressure on companies will lead them to revise the prices of their products. The prices of pulses and oil which are largely imported are going to see a rise in prices....

SBIN OPTION STRATEGY UPDATE

Update of SBI strangle strategy given in post--- SBIN 1800 PUT BOOK PROFIT NEAR 49-50 .

INFY RESULT GOOD OR BAD

No other stock traded on the Indian bourses reacts consistently the way Infosys does. A swing of 8-10% on the result day is normal for the stock.The ‘long strangle’ option strategy (buying an out of the money call and similar number of out of the money puts) is something that most option traders practices on Infosys’ result day. The build of position in the stock is the main reason for the stock movement.
 

This quarter the ‘calls’ have won. Infosys surprised the market by announcing better than expected numbers resulting in the stock shooting over 11%. However, the devil is in the details. While the market has reacted sharply to the numbers, it is the consistency of these numbers that is key for the long term revival of sentiments in the stock....

CURRENCIES MEASURED IN TERMS OF DOLLAR

Currencies always trade in pairs because the value of each currency is measured against that of another currency, yeilding a rate of exchange for the currency pair. The primary reason that most currencies trade in the forex market against the U.S. Dollar goes back to Bretton Woods agreement made near the end of the Second World War.After that devastating global war, the United States was the only major country which emerged relatively strong economically after the costly conflict compared to the other significant nations of the world.Despite proposals for the creation of a neutral global reserve currency called the bancor, pressures prevailed for the U.S. Dollar to be chosen as the world's reserve currency at the Bretton Woods conference held in New Hampshire in 1944, just before the end of the war....

SBI STRANGLE STRATEGY

Buy SBI 2000 call @25

Buy SBI 1800 put @ 21

COST =46    

 RISK PER LOT = 5750

RETURN = UNLIMITED

UPPER BREAK GIVEN POINT=2046

LOWER BREAK GIVEN POINT=1734

Pay off table...

OPTION ADJUSTION

Adjusting an option position really is an essential skill for any investor – I would even say it is a mandatory requirement. Properly managing risk by adjusting can help you repair strategies that have gone wrong, limit huge losses or even create additional potential gains As a disclaimer it’s important that you know both HOW to adjust an option trade and that you are aware of the additional broker commissions you will be charged to exit/enter additional contracts. Take your time when adjusting so that you don’t adjust and create an even bigger hole from which to dig out of.

1. What’s the goal?

 Make sure that you are either reducing risk somehow someway or  creating a new strategy that could make you more money.

2. Are you really reducing risk?

Forget for a minute that you are not going to make money if you get into a bad trade.

3. Should you just close out the trade?

This is always one of my 1st considerations. If you’ve made a small profit and things are starting to go south it might be a wise decision to just close out the trade and re-evaluate the market. Don’t let your ego get in the way of making money.

4. How have the market trend  changed?

I’m sure when you entered the trade you had a firm opinion on the market if the trend is changing then is your options strategy structured to profit from the new market Wait to see a medium term change to adjust and remember that 1 day doesn’t make a trend.

SHORT STRANGLE STRATEGY

Components

Short one put option with a lower strike price and short one call option at a higher strike price.

Risk / Reward

Maximum Loss: Unlimited as the market moves in either direction.

Maximum Gain: Limited to the net premium received for selling the options....

LONG STRANGLE STRATEGY

Components

Long one put option with a lower strike price and long one call option at a higher strike price.

Risk / Reward

Maximum Loss: Limited to the total premium paid for the call and put options.

Maximum Gain: Unlimited as the market moves in either direction.

Characteristics

When to use: When you are bullish on volatility but are unsure of market direction....

NIFTY SHORT STRANGLE STRATEGY

SELL NIFTY 6000 PUT  @54

SELL NIFTY 6200 CALL @59

TOTAL RETURN=(54+59)*50= 5650

LOWER BREAK EVEN POINT=6141

HIGHER BREAK EVEN POINT=6054

OUTLOOK  FOR 7-9 DAYS

ADVANTAGES AND DISADVANTAGES OF ONLINE AND OFFLINE TRADING

The introduction of the Internet has surprisingly changed our way of life as a society. It has defined the way we do business and the way we correspond. The Internet has opened many opportunities for online trading. The financial industry revolves around the Internet. Every thing is just a few clicks away. This makes online trading most convenient. But there are still investors who prefer the old fashion way of offline trading and they mainly prefer offline trading for security reasons. Of course, online trading has many pros. There are several wonderful reasons to invest online and consider online trading.

1. Money saving opportunities
The amount of money you save depends primarily on the online brokerage firm that you choose. 2. Instant online access –One can gain instant access to your account, the value of your portfolio updates immediately before your eyes....

Features of Offline trading:

 1.Call or visit the broking firm and trade.

2.Transfer funds online as well as via cheque

3.Shares can be transferred online if account is with same broker else can deliver   manually too.

4.Trading limits can be flexible depending on the relationship with the broker.

5.Can’t view real time quotes, would have to depend on the dealer.

6.Tele-confirmation of trades.

7.Contract notes can be viewed online as well as can be received offline via courier

8.Accounts, balances, portfolio etc can be viewed online as well as on request can be received via courier.

9.Higher brokerage/commission costs.

BOOK PROFIT IN SBI STRANGLE STRATEGY

SBI strangle strategy given in post  gives good return….

We have  booked put at 70 and call at 44.

Total return=14250 i.e.  there is net profit of  3750 .

Hope you have booked profit

Benefits of Online trading:

 1.Trade from almost anywhere.

2.Transfer funds online from anywhere.

3.Shares are transferred to and fro online. (as compulsory one has to open a demat account with the same broker he wants to trade online with)

4.Can trade only to the extent of credit in the trading account.

5.Absolutely Real time stock quotes....

A SYNTHETIC SHORT PUT

A synthetic short put is created when long stock position is combined with a short call of the same series. It is so named because the established position has the same profit potential a short put.

The covered call is a popular example of a synthetic short put.

 When to Use

1.In bearish momentum  but want limited risk.......

BROKERAGE AND TAX

If combine this with the fact that inflation reduces the value of money over time, you are just loosing money if you do not invest wisely without understanding brokerage and inflation. A stockbroker earns a commission on whatever transaction you make. Suppose you make a transaction of Rs.2000, and the stockbroker charges you a 3% commission, then you have to pay the stockbroker Rs.60 for the transaction. So your total investment in the transaction in not Rs.2000. The total investment in the transaction is Rs.2060/-Brokers make money on whatever transaction you make. Whether you buy or sell, brokers will make money. Because brokers basically make money on transactions.....

MISTAKES TO AVOID WHILE TRADING IN OPTION

5 Mistakes to avoid while trading in option

1. Not having a defined exit plan
2. Trying to make past losses by doubling up

3.Trading illiquid option

4.Waiting too long to buy back short strategies

5.Legging into spread trades

CALCULATION OF PROFIT N LOSS IN OPTION TRADING

While it comes to calculation, there are 2 things we have to learn – how to calculate the break even point of an option and how profits/losses are calculate. Let’s go with an example, nifty to understand better how profits and losses are calculated in options trading. The lot size of nifty is 50 shares in number irrespective of call or put. The profit/loss does not depend on the type of call , expiry or strike price. It directly depends only on premium which trader selects while purchasing the option....

BOOK PROFIT IN NIFTY STRANGLE STRATEGY

 Buy Nifty 5800 call @40 (sold at 88) and Buy Nifty 5700 put @ 76 (sold at 106) in last post. Net cost was  196 now it is 106 ,Book profit of (196-106)*50=4500 in the strategy given in post.