Big Boss is watching you.

Men says:
“yesterday you said we could see 4550 and today you said buy nifty @ 4800 for a PROBABLE target of 4925, how come change in view in one day, could you please clarify.”

My Notes:
It is nice to know that I am closely watched on TV. I am giving a chart for the Nifty (at the end) which highlights the significance of the 4550 zone. This zone has acted as support / resistance many times earlier. I referred to this support when talking with Mitali on Tuesday afternoon as the Nifty was falling.

On Wednesay morning, I provided a day trading call on the Nifty. It seemed that a small relief rally was possible hence the buy call with probable targets and stoploss.

Ravi asks: “I have a question that I’d like to ask. I’ve been trading in individual stock options recently particularly TATASteel and ICICIBank, making a premium from my prices. But I’ve noticed that the option prices after a point are not appreciating even though the stock price is falling and there are no trades happening on the options. How do I go about squaring off such an option (second month option)?”

My Notes: Options traders must have a clear understanding of implie volatility. Sometimes when you buy options with low IV, and the price registers a violent move against you, you will find that the option price does not go much against you since implied volatility has gone up. Reverse may happen when you buy options with High IV. As  a seller, you gain when IV comes down, and lose when IV goes up after you sell.
The other question is about liquidity in options. This is a problem in India where we do not have any market makers.You have to wait patiently till a buyer/seller comes for your trade. Often, putting in a fair bid attracts an opposite party, soon enough.

I have to go for my Awaaz interview at 9:30 AM. More later.