Posts Tagged ‘RBI Monetary Policy


Volatile week ahead..

What a sharp bounce-back we had from the Nifty lows of 5120 couple of weeks back! May be, it was oversold markets bounce or Dr. Rajan effect or may be a combination of both. INR along with other emerging market currencies has also bounced back from its lows of 68.8. But there are two key events ahead which will decide further course of direction for Indian markets. US Fed will take decision about QE tapering which will have huge bearing on Emerging markets including Indian markets. Last week Non-farm payroll data was below market expectations and it might force Fed to go light on taper. In case Fed tapering is aggressive than US $ 10 billion per month, emerging market assets might sell-off again. After Fed decision, RBI monetary policy on 20th September will also be key for markets. There are a lot of expectations from RBI new Governor to announce growth oriented measures.

Implied volatility (IV’s) in option market are at 12 month high given the expectations of market movement either side after these two important events next week. Delta neutral hedge may be one of the strategy if you have underlying asset and sell options to benefit from higher vols. I have done the same in L&T. But apart from that I don’t have any other position in market currently and waiting for these events to pan out and then take a call. Buying strangle can be one more strategy to benefit from these events but given higher vol. I won’t do that.

Disclaimer: 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.


Maruti follow up

In my previous post, I had mentioned about selling Maruti 1350 Call. I wanted to wait for RBI rate hike decision on 16th June before writing 1300 Call, but yesterday there was sudden spike in 1300 call premium. Returns from Maruti 1300 call at 4.75% in remaining 17 days of June series, became too compelling for me to go ahead and write this call. Its high risk trade, but returns are also high. There might be some spike in share price if strike at Maruti is called off, but I don’t expect share price to rise too much.

July 2018
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