PostMortem on BankNifty Today & Analysis of 30 DEC 2022
Quite a boring day today with bank nifty, maybe the bulls would have already started partying for the wonderful year they had in 2022.
21% return on investment for bank nifty this current calendar year - why would the bulls not party?
BN gap'd up at 43401 and was falling gradually, there was an interesting candle at 09.30 & equally interesting counter move at 09.35 and right after that the bulls would have just signed off for the day. A narrow range bound trade with a minor negative bias - and then another strong red candle at 15.00.
That candle alone had a 0.8% fall, but it took support at the SR band 42888 and over the next 5 candle BN retraced half of that quick plunge. The day was otherwise boring with pretty low volumes.
The closing minutes of trade the OTM CE options premiums were surging hinting at a heavy call writing overnight position.
Look at the daily chart of bank nifty - 17th June 32290 to 42986 on 30th Dec. 10696 points mega rally. And all these when the SP500, NDQ falling and returning negative returns for the year.
Some real credit has to be given to the investors - who are now sitting on handsome profits. Feeling sad for the bears who thought Indian markets will follow the same slope as the global peers - i am also a disappointed bear this year !
As i always say its good to have a view, make money if the view is right. Also try not to lose if the market goes the other way.
Over the weekned i will be redrawing the decade old trend lines to see & speculate the next few month's moves. Dont worry - none of my predictions has worked, but i dont lose optimism when i analyze.
How 2023 will shape up, nobody will know. But few option strategies will stay evergreen which i believe will benefit you.
1. If the markets are not making huge sized red or green candles - there is a high possibility that the week could be range bound. Plan to deploy short iron fly and make adjustments if the view goes against.
2. If the moves are above the ATR (normal swing range) plan to deploy a debit ratio spread 1:2 or 2:3 or 3:5 and wait
3. Expiry trading will always make money - sell naked calls or puts with a stop loss - either boom or bust.
4. Go for credit spreads if you feel markets will go in the direction you have in mind - the max loss is preset so that you dont have to worry if the market goes against you.
5. Need not mix futures trading with options - options alone can do the work of futures at a lower transaction costs.
To summarize i would say the ratio spreads are the best instrument there is, probably i will publish a thesis in near future on why its the 9th wonder of the world (8th wonder would be the law of compounding interest). Thats because it can be theoretically programmed to have a 99.99% profit outcome any day, any trade.
May be i will take 2 to 3 more years to achieve that - till then ratio spreads will be in my arsenal for the intraday trades that i take.
Wish you a happy new year ! And hope your plans will come true in 2023 as it did in 2022 !
Cheers!
21% return on investment for bank nifty this current calendar year - why would the bulls not party?
BN gap'd up at 43401 and was falling gradually, there was an interesting candle at 09.30 & equally interesting counter move at 09.35 and right after that the bulls would have just signed off for the day. A narrow range bound trade with a minor negative bias - and then another strong red candle at 15.00.
That candle alone had a 0.8% fall, but it took support at the SR band 42888 and over the next 5 candle BN retraced half of that quick plunge. The day was otherwise boring with pretty low volumes.
The closing minutes of trade the OTM CE options premiums were surging hinting at a heavy call writing overnight position.
Look at the daily chart of bank nifty - 17th June 32290 to 42986 on 30th Dec. 10696 points mega rally. And all these when the SP500, NDQ falling and returning negative returns for the year.
Some real credit has to be given to the investors - who are now sitting on handsome profits. Feeling sad for the bears who thought Indian markets will follow the same slope as the global peers - i am also a disappointed bear this year !
As i always say its good to have a view, make money if the view is right. Also try not to lose if the market goes the other way.
Over the weekned i will be redrawing the decade old trend lines to see & speculate the next few month's moves. Dont worry - none of my predictions has worked, but i dont lose optimism when i analyze.
How 2023 will shape up, nobody will know. But few option strategies will stay evergreen which i believe will benefit you.
1. If the markets are not making huge sized red or green candles - there is a high possibility that the week could be range bound. Plan to deploy short iron fly and make adjustments if the view goes against.
2. If the moves are above the ATR (normal swing range) plan to deploy a debit ratio spread 1:2 or 2:3 or 3:5 and wait
3. Expiry trading will always make money - sell naked calls or puts with a stop loss - either boom or bust.
4. Go for credit spreads if you feel markets will go in the direction you have in mind - the max loss is preset so that you dont have to worry if the market goes against you.
5. Need not mix futures trading with options - options alone can do the work of futures at a lower transaction costs.
To summarize i would say the ratio spreads are the best instrument there is, probably i will publish a thesis in near future on why its the 9th wonder of the world (8th wonder would be the law of compounding interest). Thats because it can be theoretically programmed to have a 99.99% profit outcome any day, any trade.
May be i will take 2 to 3 more years to achieve that - till then ratio spreads will be in my arsenal for the intraday trades that i take.
Wish you a happy new year ! And hope your plans will come true in 2023 as it did in 2022 !
Cheers!
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