Hi,
During short period I have noticed something interesting about F&O and about common Traders Practice.
Some important observations which I have noticed and hope this well help you all, though I knew most of us just read such texts very carefully but when it comes to follow we forget all this and hopes & extra patience takes driver seat.
Observation 1 -
1. Option prices remain high if we are going to buy for next 2 months options, only current month prices we can find at actual, advance months options remain only based on speculation, so we should avoid next months buy (unless & until you are not very sure that stock will move only in one direction in coming months), those prices come near to realistic in the last week of current expiry.
2. In the first & second of series, option prices movement remain slow, so even if stock is going in reverse direction you can exit that with minimum losses, same is also applicable when it comes to profit booking.
3. 3rd & 4th week gives good movement to stock, and these are the week where one need to take decision about their holding 'options'. i.e. either to exit or to book profit.
4. Second part of 2nd last week of expiry & last week of expiry always remain highly volatile and it should be avoided by low risk takers. In this period option prices moves 3-4 fold in either direction, so either you could be hero or could be zero.
Conclusion -
1. We can take position in the first week, can hold till second-third week, give a thought and close your positions either with profit or loss.
2. Now one can also make fresh position in same stock in the later part of 2nd last week & in last week and then can take decision as per stock movement. The benefit of this technique is that you get options either at very cheaper rate or at reasonably low prices of same stock. It also help great in reducing losses.
To be continued....
During short period I have noticed something interesting about F&O and about common Traders Practice.
Some important observations which I have noticed and hope this well help you all, though I knew most of us just read such texts very carefully but when it comes to follow we forget all this and hopes & extra patience takes driver seat.
Observation 1 -
1. Option prices remain high if we are going to buy for next 2 months options, only current month prices we can find at actual, advance months options remain only based on speculation, so we should avoid next months buy (unless & until you are not very sure that stock will move only in one direction in coming months), those prices come near to realistic in the last week of current expiry.
2. In the first & second of series, option prices movement remain slow, so even if stock is going in reverse direction you can exit that with minimum losses, same is also applicable when it comes to profit booking.
3. 3rd & 4th week gives good movement to stock, and these are the week where one need to take decision about their holding 'options'. i.e. either to exit or to book profit.
4. Second part of 2nd last week of expiry & last week of expiry always remain highly volatile and it should be avoided by low risk takers. In this period option prices moves 3-4 fold in either direction, so either you could be hero or could be zero.
Conclusion -
1. We can take position in the first week, can hold till second-third week, give a thought and close your positions either with profit or loss.
2. Now one can also make fresh position in same stock in the later part of 2nd last week & in last week and then can take decision as per stock movement. The benefit of this technique is that you get options either at very cheaper rate or at reasonably low prices of same stock. It also help great in reducing losses.
To be continued....
Thank you very much sir .
ReplyDeleteHi MG,
ReplyDeleteI must say that great observation indeed. I am eager to read the second part.
And one more thing that i am a truly fan of your quotes.
Thanks,
Rohit
Hi Rohit, thanks to see you after long time. I was about to read second part but since past few weeks readers are less so thought to continue it next week, that way some of our regiourse followers will know what text should be next week.
Deletehello sir,
Deleteyou are increasing the suspense by doing this :)
hi..
ReplyDelete2nd point in conclusion part was the one of main observation of mine in last series... hope 2 c some more observations from u sir...
Good article for FNO traders...
Wish to see many more from you sir.
Thanking You
kashyap
Yes that is true but as told hopes and extra patience driving seat and we keep our positions open in second last week to last week of expiry, which lead either handsome profit or big loss.
DeleteFeb series - by letting experience of some of BC members, they were in profit of above 20K till 3rd week, and after expiry they are in loss of 30K+, mean is simple they are in totall 50K loss.
That's I tell most of time - I can give you many calls, which can be either with good profit or loss. But most of us are habitate to trade on daily basis, they want me to make calls on daily basis... this is purely gambling, and we are not investors or traders in such case.
ReplyDeleteI am here to double your money in 1 years time. If someone take oath and follow our calls strictly, he can make 1L Rs. against his investment of 1L in 1 year time.
Now questions is - to them 1year seems too long and they want to make money double in just 1 or 2 months... I am sorry to say but its false, you can make good money that way but one good day like Feb end will take away all your profit and will put you in big loss.
One who will understand this fact - will be real winner of market... else story is continue... market will see many participat packing up their goods to say final -Good Bye to market.