Posts Tagged ‘Sun TV (India)

18
Jul
11

Waiting for new opportunities..

July series has been one of my best till date return wise. ONGC and Sun TV panned out as expected. Premiums have come down to near zero levels and I have started covering my positions.

I have started looking forward to August series. It should be much more challenging than July series.  I am waiting for some event or trigger point to happen so that I can start initiating trades for next series. Given the problems around Euro-zone, it makes sense to wait for favorable risk reward ratio rather than chase events. In case Mr. Maran is named in CBI charge sheet for 2G scam, Sun TV might have one more down move. It should be an opportunity. If one of the biggies announce poor results, that should also be an opportunity to write some options.

I wish HDFC had announced poor Q1 results. But results were good along the expected lines. I don’t know how do they manage it, but they have consistently delivering 20-25% growth for past 30 quarters. HDFC has become the benchmark of consistency in Indian markets. Almost every FII or DII has exposure in HDFC. In case of poor results, HDFC would have provided good opportunity in terms of writing options. Reliance Industries is trending downwards and is currently trading around 870 something. Lot of issues like gas output, CAG adverse report and more importantly lack of clarity has hampered RIL stock. In case cabinet approves RIL-BP deal, RIL stock should see 5-6 percent positive reaction. As of now, its difficult to write both calls and puts in RIL. ONGC will come out with FPO in september, with or without clarity on subsidy sharing formula. I am not sure if without clarity on subsidy sharing, ONGC would get a price of more than 240-250. But deferred FPO should throw up some opportunity in August series. Infosys came out again in Q1 with sub-par results. I think more than Q1 results, not scaling up of Annual guidance spooked the markets. In contrast TCS Q1 results were above market expectations. Both Infosys and TCS present opportunity in OTM calls. I need to track result season carefully for next trading idea.

(Yesterday while booking tickets for Zindagi na milegi dobara, I felt very happy while seeing seats full tag. As a shareholder of Eros International, I have every reason to be happy. I will watch the movie today. If you have not seen the movie till now, please go and watch it.)

Advertisements
07
Jul
11

Bought some panic today..

One more DMK wicket is down from cabinet after Mr. Dayanidhi Maran resigned as Textile minister today (http://www.livemint.com/2011/07/07135546/Dayanidhi-Maran-resigns-as-Cab.html?h=A1). It was seen coming after CBI implicated Mr. Maran in chargesheet yesterday. Sun TV shares fell sharply as soon as the news broke out. Puts from 200-240 were actively trading. Implied Volatility (IV’s) as well as option premium increased sharply. I thought panic reaction was an opportunity to write some OTM puts, since premiums were quite compelling. I think lot of negatives and uncertainty is factored in Sun TV share price. Lot of people might compare Sun TV with GTL or RCom, but they are ignoring one big fact that Sun TV is doing extremely good on business front. It’s high risk, high return trade.

04
Jun
11

Benefit from Sun TV drastic fall

As option writer, I love the kind of events that happened in Sun TV last week. As the news broke out, Mr. Maran might have misused his power to benefit the family business, Sun TV saw drastic fall – closer to 30 percentage. Due to this drastic fall in Sun TV, Implied Volatility in its options increased substantially to 150%. Are these IV’s sustainable ? Answer is no in short term since  stock will remain volatile over next few days and will take time to stabilize. But after next few days IV’s will surely come down from unrealistic 150 odd level.

Options in Sun TV were quite illiquid(low or no trading volume) before this fall. But now situation is just opposite and options from 180 put to 400 call are quite liquid. Given the negative news flow emanating not just related to 2G scam but also on business front from Chennai, it looks extremely difficult for Sun TV to go back and test 380-400 levels. One can write OTM 380 or 400 calls for June series resulting in 6.8% and 3.5% returns respectively in 27 days (assuming 10% margin requirement of contract value).   Writing puts in this case can be quite risky since no one knows the extent of damage which can occur in the stock. As of now, I have written one OTM 400 call and looking to write some more 380 calls in case stock rebounds.




December 2017
M T W T F S S
« Aug    
 123
45678910
11121314151617
18192021222324
25262728293031

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 233 other followers

Archives