06
May
14

Election strategy for USDINR

Given the binary outcome of 2014 General elections I have also decided to take positions in USDINR options. Election outcome is extremely crucial. Clear mandate for NDA which is perceived to be business friendly will be positive for Equity & Currency markets. Any fractured outcome or BJP tally of less than 180 seats will be extremely negative for markets. NDA tally of 250-260 plus will be extremely positive. Volatility will be the central theme.

I have bought USDINR 60.5 straddle (60.5 call & 60.5 put) and sold 61.5 call & 59.5 put. I need movement of 1.6 per cent to make money. USDINR should see the movement more than 1.6 per cent and break its current range of 60-62 on either side. If NDA comes to power with resounding majority than INR will appreciate below 60 and fractured mandate will lead to sharp INR depreciation. In case of fractured mandate, India’s sovereign  credit rating might be downgraded. But on the other side if INR appreciates sharply RBI might intervene and slow the pace of appreciation. One thing is certain, current USDINR range of 60-62 is about to be broken on 16th May and we are in for some exciting times rest of May.

Disclaimer: These are my personal views and you should do your own due diligence before acting on anything written in this blog. Please take reasonable care while trading in options, especially while selling. I am not advising anyone to sell or buy options. My purpose of writing this blog is to highlight my trading strategies.

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