Month: July 2021

Jun21-W2: Nifty Index 50 to slowly slide this week (Jul5 to Jul9)?

Nifty Index 50 failed to show strength in upward direction too. Earlier, it did not fall much despite divergence and now it is not moving upward. It is frustrating. Anyhow, it remained exactly within black line boundaries of my last week’s yellow box.   

Now, here’s what I am looking at:

Nifty index 50 has respected a parallel channel and is on the verge of slipping from it. If that happens, the green trendline should give support. On the flip side, if Nifty continues to somehow remain above lower trendline of channel, then it can again try to cross the glorious level of 16000

Thus, scenarios for the week ahead (highlighted as yellow box with black lines dissecting scenarios)…

ScenarioProbabilityAnticipated Price Action
ConsolidationHighBetween 15850 and 15550
DowntrendMedIf breach below 15550; to drop somewhere till 15350
UptrendLowIf breach above 15850; to rise somewhere till 16150

The lack of volatility is always a sign of quiet before storm. With weekly timeframe also showing signs of exhaustion, my bias is on the downside for next couple of weeks. But market doesn’t read my blogs. So, let’s see

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.

nifty index 50 market volatility

Jul21-W1: Volatility reversion to mean is money

Though my view on Nifty for the week was quite bullish, I was already holding strangles since Jun 23rd. The strangles started giving nice profits due to absence of any action on Jun 24th and Jun 25th. By end of Jun 25th, I rolled in the strikes while again having no idea what could happen on Monday.

In hindsight, I should not have had such a bullish view since stochastic on daily timeframe was never going up. Market respected the momentum indicator and started slipping since Monday. However, the pace was not enough to cause any damage to puts. In fact, the put options remained in profit despite the fall.

The sluggish movement of market until Thursday meant that all I had to do was roll-in options on both sides. This helped me in earning a handsome profit for the week ending July 1st. In fact, July 1st must be one of the most boring expiries over the past couple of years.

However, the law of averages spares none. It is incredibly risky for option sellers to hold positions in such a tightly squeezed market. I am therefore forced to take positions which have very little premium in them. So, the coming week may not be as profitable. Absence of volatility might make the next couple of weeks difficult for me.

Jul21-W1: Nifty index 50 trades beat target CAGR

On Jun 23rd, I sold nifty index 50 strikes expiring on July 1st which meant that time to expiry was more than a week. Higher the time to expiry, higher the premium. But it was not the time that made me take positions in advance. The reason was volatility. If you will see intra-day Bollinger bands on Jun 23rd, they were quite stretched out.

So I sold OTM strangle from Jun 23 to Jul 1 whose daily candles were like this:

Here are the results:

Net Profit (after deducting brokerage)Capital deployed (approx)Week’s ROIAnnualized ROI for this weekTotal no. of weeks traded till todayAverage CAGR till today
Rs. 7,232.3Rs. 6,32,1341.144%80.68%351.61%

Where annualized ROI for week = ((1+week’s return in decimal)^52)-1)*100

The following is breakdown of week’s positions:

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.