Rohit SinghUpdate - 3 April 2020
Last week was a dead cat bounce. Today the market rejected upside which came due to RBI measures.
India Vix is falling, still the market is going down. Slowly and steadily we are coming back to the normal trading range but Vix is still very high.
I created a Ratio Calendar in the morning on #NIFTY. Sold -6 Lots of 8500 CE at ₹88/- of current week ad bought monthly 3 lots of 9000 CE at ₹178/-. Rational is very simple. Its partial hedge. Ultimately this week will go to 0 and monthly will retain some value. I am still holding this position.
I am also holding short position in #INFY. I have done a 600/640 CE credit spread. I am selling Infy from 650 levels.
I took a bearish position on #AXISBANK at 352 today and sold 360/400 CE credit spread.
I took a bearish position on #BHARTIARTL at 422 today and sold a 440/460 CE credit spread. It has yet to come in profit.
For trading purposes, I purchased #INDUSINDBK in 400 qty at 348.50 and simultaneously sold 400 CE at ₹74/-. This makes my effective purchase price at ₹276/-. From July 2020, the lot size will change to 800. My ideal scenario is that stock may cross ₹400/- by 30 April 2020 by which I stand to gain ₹50,000/- from this trade. If it remains near ₹350/- I stand to gain ₹30,000/- approximately. If let's say it falls to ₹300/-, I am still making a profit of 26 points times 400. If it comes to ₹250/-, I will again sell a call option above 300 for ₹70-80/- which will bring my effective price to ₹200 for the stock. I will repeat the same process until May 2020. But by all means, I don't expect such a worst-case scenario that stock will lose 95% value. If it comes to that, I will stay invested in Indus Ind Bank at an effective price of around ₹120/- which I think will be less than fair value and be a good investment anyhow.
Rohit Katwal