January – A month of choppy trades with negative returns

End of January Series and beginning of February Series – What to Expect?

There were 6 trades for the month. Out of the 6 trades, 1 was profitable and 5 ended up in loss. With a starting capital of Rs.30,000, the final loss for the month stand at Rs.2,680. The overall profit for the last six months stand at Rs. 15,978.75, a 53.3% gain.

What went right for the month?

The profitable trade that we took during the expiry week, wiped out most of the loss for the month. It was a low risk and a high reward trade which paid off.

What went wrong for the month?

Throughout the month, system was not giving a clear signal and was swinging either side. We couldn’t get our trades right in the starting of the month. There were a few opportunities to take profits out of trades, but we let it run into loss. Overall, the expiry trade also backfired. Though it came back in range, it took our stop loss before that.

Learnings and how do we move forward

1. We were able to get a less risk, high reward trade during the expiry week and more such trades need to be in place going forward.
2. Stock option trades erode in value rapidly and though at times we were profitable in RCOM, we didn’t cash in on that. Also the stock made a move against us immediately after we took the trade and after that we missed coming out profitable and re-entry on multiple instances.

How does it look like for the February series

January series closed comfortably above the psychological mark of 6000 levels and February series has broken that. Going forward the negative divergence in weekly and daily charts indicate a bearish move, but there might be an upmove early in the month to trap more bulls. We will wait for confirmation from TripleInt’s option trading system for initiating new trades.

Nifty January Expiry Charts

The expiry chart is given below

For other option price move charts on the expiry day, please follow the link
http://tripleint.com/nifty-31-jan-2013-expiry-chart/

Performance for the month of January

Date Open Date Closed Scrip Option Type Strike Expiry Num Lots * Lot size Entry Price Exit Price Total Investment Profit/Loss Comment
31-Dec-2012, 9:55 am 01-Jan-2013, 9:05 am NIFTY PE 5800.00 31JAN2013 4 * 50(200) 40.75 29 8150 -2350 Negative divergence in weekly and daily charts. Likely to come down and test lower levels of 5832. Closing comment: Stop loss triggered. Was able to close only at 29
10-Jan-2013, 9:45 am 10-Jan-2013, 11:40 am NIFTY CE 6100.00 31JAN2013 3 * 50(150) 37 33.80 5550 -480 System pointing to an upmove for the day. OI indicating bullishness after the gap up today. Closing comment: System oscillating between puts and calls and the OI trend is also changing. It is better to stay out for a while until we get further confirmation on a breakout either side
11-Jan-2013,12:22 pm 14-Jan-2013,3:05 pm NIFTY PE 5900.00 31JAN2013 3 * 50(150) 30.3 19 4545 -1695 System indicating a down move along with pattern of divergence. Closing Comment: Stop loss triggered in position.
11-Jan-2013, 1:03 pm 22-Jan-2013, 1:05 pm RCOM PE 75.00 31JAN2013 1 * 4000(4000) 0.7 0.1 2800 -2400 RCOM looking weak with strong negative divergence. Closing comment: Strong down move happened on 24th Jan but position is stopped out before itself.
29-Jan-2013,11:34 am 29-Jan-2013,1:45 pm NIFTY PE 6100.00 31JAN2013 4 * 50(200) 25 55 5000 6000 Nifty likely to go down from 6114 levels till 6036 levels before tomorrow. Closing comment: 6050 acting as some support. The position is closed for profit
31-Jan-2013, 1:16 pm 31-Jan-2013, 2:45 pm NIFTY CE 6000.00 31JAN2013 3 * 50(150) 40.70 29 6105 -1755 Nifty likely to move back in range for the day. Closing comment: Stop loss triggered in position.
Overall Profit/Loss Rs.-2680

TripleInt’s Option trading System at end of January Series

======== Underlying Index: NIFTY 6034.75  As on Feb 01 2013 09:00:02 IST =========

Set-1 NIFTY Overall Buy
## SPOT 6034 Puts Calls IV Skew OI Skew IV Skew OI Skew Overall IV Skew%
## 6034 5600 6500 CALL CALL -20.79 -584,700 CALL -97.57
## 6034 5700 6400 CALL CALL -18.22 -534,200 CALL -92.13
## 6034 5800 6300 CALL CALL -6.78 -731,300 CALL -26.56
## 6034 5900 6200 CALL PUT -4.63 1,265,550 -17.84
## ## 6000 6100 CALL CALL -3.69 -710,800 CALL -14.26
Set-2 NIFTY Overall Buy
## SPOT 6034 Puts Calls IV Skew OI Skew IV Skew OI Skew Overall IV Skew%
## 6034 5600 6400 CALL PUT -19.15 1,068,250 -93.45
## 6034 5700 6300 CALL CALL -17.52 -517,900 CALL -89.59
## 6034 5800 6200 CALL PUT -6.68 350,050 -26.22
## 6034 5900 6100 CALL CALL -4.66 -708,600 CALL -17.95
## ## 6000 6000 CALL CALL -4.00 -3,809,800 CALL -15.34
Set-3 NIFTY Overall Buy
## SPOT 6034 Puts Calls IV Skew OI Skew IV Skew OI Skew Overall IV Skew%
## 6034 5700 6500 CALL CALL -19.86 -2,187,150 CALL -96.71
## 6034 5800 6400 CALL CALL -7.48 -747,600 CALL -28.87
## 6034 5900 6300 CALL PUT -4.73 184,200 -18.19
## 6034 6000 6200 CALL PUT -3.66 1,263,350 -14.15
## ## 6100 6100 CALL PUT -3.38 2,388,200 -13.16
Set-4 NIFTY Overall Buy
## SPOT 6034 Puts Calls IV Skew OI Skew IV Skew OI Skew Overall IV Skew%
## 6034 5700 6600 CALL CALL -20.12 -2,465,700 CALL -96.39
## 6034 5800 6500 CALL CALL -9.12 -2,400,550 CALL -33.50
## 6034 5900 6400 CALL PUT -5.43 167,900 -20.57
## 6034 6000 6300 CALL PUT -3.76 182,000 -14.51
## ## 6100 6200 CALL PUT -3.35 4,362,350 -13.05

Happy Trading
—www.tripleint.com

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