Posts Tagged ‘U.S. Dollar Index


Currency Options USDINR: March series

February series for USDINR option expired on 26th February. My sold 52 puts expired worthless ( I had rolled over sold puts to March series. In march series apart from 52 puts, I have also sold 52.5 puts. In last week there has been risk off in global markets. Risk off is best reflected by the Euro level of 1.3 and Dollar Index above 82 levels (Dollar Index level is skewed by the sharp depreciation of JPY).

I was selling USDINR puts aggressively after Union budget on 28th February. IV’s were high and there was expectation that FM might announce big bang growth measures. INR rallied till 53.6 levels and sold immediately to 54.9 level by the end of budget day. I expect INR to remain weak on account of high current account deficit with periods of volatility. In case INR appreciates to levels of 52-53, it should provide opportunity to sell some more puts (But I am worried about this trade because Mr. Sudarshan Sukhani (CNBC TV18) is also bearish on INR and expects it to touch 57 level ūüôā ).


Interesting times ahead..

All the¬†news flow makes case for interesting and tough times ahead. US Dollar Index rose ¬†by 1.7% yesterday (the largest single day gain since Aug’10), resulting in all risk assets falling sharply, including crude oil. Why USD Index rose is a bit confusing for me, since report after report shows that US growth on life support system by QE is slowing. Yesterday, Federal reserve bank of New York manufacturing index dropped to its lowest level since¬†November last year. Part answer of USD Index rise could be trouble in its biggest constituent, Euro (57.6%). It is like a tussule between who is weaker between Euro and US.

Indian market should be happy with commodity sell-off. There might be some knee jerk negative reaction, but if crude keeps falling it should be good news for the Indian market. Another major concern, Interest rates should be nearing its peak after RBI  rate hike of 25 bps today. Is Indian economy slowing down sharply? Yesterday some of advance tax numbers did not give evidence to that. Infact advance tax numbers from top 100 companies in Mumbai region has increased by 14 percent.

As option writer, what does all this news flow means for me. Lot of major stocks RIL, Tata Motors, SBI, Maruti and ONGC are looking weak and they have already come down quite a lot. Its difficult for me to write any OTM calls since premiums are low and also there might be some rebound from oversold zone. Normally I don’t write puts and in this global turmoil I would be very cautious in doing so. Except for some oversold stocks like Reliance communications, I won’t write puts. Can’t do much at this point of time except wait and watch..Anyways for June series all my margin money is blocked in existing contracts.

February 2019
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