Update - 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

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