Wednesday, October 29, 2014
Sunday, October 26, 2014
NTPC update - will it disappoint bulls once again
Since the last post on NTPC, with specific reference to the OI of 150 CE, it seems the 150 CE writers are not willing to give up, and in fact the OI has increased from 16 odd to 18.72 lakhs.
The levels on the 150 CE chart indicate that the CE can rise to 1.5-1.8 or even 3, which means the stock can cross 150, but as long as NTPC does not cross 153, these CE writers are safe with their written CEs.
Since we are heading into expiry week, this OI becomes even more important, and hence needs to be closely watched.
Those who have bought the CE below 1, can consider booking it near 1.5, but at the same time need to keep an eye on the OI of this CE.
It is possible that the CE might lose in price from 1.5, but the OI too can start reducing.
Another hint can come from OIs of 145PE (OI 3.34 lakhs) and 150 PE (OI 2 lakhs). If these OI figures start going up, NTPC can rise
If this happens, it is worth buying it again below 1.
It is all about the Push from the OIs of the PEs and the pull from the OI of the CEs, and whoever is stronger will win.
To summarise - watch for RISE in OI of 145 and 150 PEs, and also FALL in OI of 150 CE.
If this does not happen, NTPC will once again disappoint bulls, as it has done so many times of late.
If following so many figures is difficult, just wait for updates on Twitter.
Happy trading .....
The levels on the 150 CE chart indicate that the CE can rise to 1.5-1.8 or even 3, which means the stock can cross 150, but as long as NTPC does not cross 153, these CE writers are safe with their written CEs.
Since we are heading into expiry week, this OI becomes even more important, and hence needs to be closely watched.
Those who have bought the CE below 1, can consider booking it near 1.5, but at the same time need to keep an eye on the OI of this CE.
It is possible that the CE might lose in price from 1.5, but the OI too can start reducing.
Another hint can come from OIs of 145PE (OI 3.34 lakhs) and 150 PE (OI 2 lakhs). If these OI figures start going up, NTPC can rise
If this happens, it is worth buying it again below 1.
It is all about the Push from the OIs of the PEs and the pull from the OI of the CEs, and whoever is stronger will win.
To summarise - watch for RISE in OI of 145 and 150 PEs, and also FALL in OI of 150 CE.
If this does not happen, NTPC will once again disappoint bulls, as it has done so many times of late.
If following so many figures is difficult, just wait for updates on Twitter.
Happy trading .....
Monday, October 20, 2014
An old observation on OI on stock options - watch NTPC now
NTPC suddenly shot up in the last hour of trading today.
Looking at the OIs of various CEs, it is seen that 150 CE has the maximum OI (16.08 lakhs).
It has been observed that when a stock rallies beyond the strike price that has the maximum OI, it rallies further for at least another 10%.
Looking at the chart of 150 CE, there is a resistance at 3-3.2.
It can be safely said that once NTPC crosses 153-154, it can rally for another Rs. 15 to say 165-170.
Nothing is certain in the stock market, but it is worth keeping the above in mind and if and when NTPC 150 CE crosses 3.5, you can aim for a target of 15 on it (but trail it, and not wait blindly).
It will also help to keep an eye on how much the OI of 16.08 lakhs reduces, since that will be a big indication of things to come.
Happy trading.....
Looking at the OIs of various CEs, it is seen that 150 CE has the maximum OI (16.08 lakhs).
It has been observed that when a stock rallies beyond the strike price that has the maximum OI, it rallies further for at least another 10%.
Looking at the chart of 150 CE, there is a resistance at 3-3.2.
It can be safely said that once NTPC crosses 153-154, it can rally for another Rs. 15 to say 165-170.
Nothing is certain in the stock market, but it is worth keeping the above in mind and if and when NTPC 150 CE crosses 3.5, you can aim for a target of 15 on it (but trail it, and not wait blindly).
It will also help to keep an eye on how much the OI of 16.08 lakhs reduces, since that will be a big indication of things to come.
Happy trading.....
Thursday, October 9, 2014
"Jara hatke" study
I noticed the triple bottom on SBI on the monthly chart (August, September and October so far), and realised if this bottom holds, SBI can give a good rally.
This made me plot the following chart:
This made me plot the following chart:
This chart is the ratio of BankNifty futures to Nifty futures on hourly time frame.
At present it is trapped in the range 1.9 to 2. A breakout above 2, can take it to 2.1.
These fractions look small, but if you apply the ratio to Nifty, it becomes clear.
8000 x 1.9 = 15200
8000 x 2 = 16000
8000 x 2.1 = 16800.
It might be argued that Nifty futures will not remain static, and this ratio can still remain range bound.
However, it is worth going long in BankNifty when the ratio drops to 1.9, and hold long till the ratio hits 2, and on crossover 2.1.
This can also give good 'Pair trades' for those who do it regularly.
The historic high is 2.15 !!
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