iCharts Discussions

[sanmen]

Dear ST

yesterday's high has been taken out. whether this is a breakout or not is not confirmed. Would appreciate if you can post an update during the market hours on today's movement and its implication

thanx!

Sandeep

[SwingTrader]

[SwingTrader]

[dine]

Thanks a lot ST

[SwingTrader]

Looking at options sentiment today it looks like my bearish scenario finally could be starting to play out. Either that or I might get kicked some more!!!

There were two similar scenarios that I had faced with options sentiment recently :

One was the monstrous Nov 2011 end move marked A on the attached options sentiment chart. Options sentiment had given a sell on 11th Nov and the position was solidly profitable by Nov expiry and since options sentiment went to bearish extreme I could hedge before the up move began. So it was not bad at all. Everything worked out well.

The second was the sell signal on Feb 22nd marked B on the chart. This too was not a problem because even though I did not get an opportunity to hedge (options sentiment did not hit bearish extreme before the up move began) the price itself did not retrace past my short entry. Eventually the position turned out fine.

The current position has tested my patience a lot as price retraced around 245 pts beyond my entry (on a closing basis). Fortunately I hedged immediately when I saw the big gap up move day bef yesterday. That allowed me to stay in my position. Still not sure how this will play out. If price continues to go up from here my hedge will takeover and turn my position profitable after another 50 pts rally. If price reverses down from here and the bearish scenario that continues to be indicated by options sentiment plays out then the position will turn profitable little later. I will probably unhedge once I get a clear confirmation of the reversal. The position will turn profitable after that provided the move down continues.

Let us see. The idea of my trading using options sentiment is to position oneself properly to take advantage of the move if things play out as expected, at the same time also to hedge when necessary and keep losses to a minimum and patiently wait for the correct move or exit and position properly for the next move.

Sandeep....today's move was the reason why I choose to wait until EOD to decided if today was a breakout. Price reversed down strongly after rallying. It did look like a breakout but it was not on a EOD basis. Also, the volume all along in this rally has been pathetic. I am not sure how NF managed to rally this high on decreasing volume. Anyway....who are we to argue with price!!!

[sanmen]

Thanx a ton ST for your views...really appreciate it!!

thanx!!
Sandeep

[SwingTrader]

In the NF daily chart attached the volume oscillator is indicating declining volume in uptrends and rising volume in downtrends. This in my opinion does not indicate strength. Also, during the last rally (early June) had stronger volume on up days and lower volume on down days initially when price shot out of the May lows. We do not see that in the recent rally. It is the opposite this time. The strong gap up too was on pathetic volume. We may still breakout to the upside, who knows, but we are surely not doing so on stronger foundation if we breakout from here. This is just my opinion, something to think about.

This week is probably going to make or break for my position that I am holding in line with the bearish sentiment but against the current short-term trend. This is, of course, uncomfortable position to be in. Fortunately I have a futures hedge countering my ITM 5400 put.

A breakout above 5400 will turn my position profitable as ITM put delta will drop significantly as put goes OTM and futures profits will overtake the loss in put.

On the other hand if market reverses down from here the main options sentiment scenario will take over. I will have to unhedge by closing the futures position to get back into bearish mode (leaving the hedge in position is not an option in this case as put delta will never overtake fut delta of 1.0). I will unhedge once I see a clear reversal down.

In any case, this particular trade is not the ideal options sentiment trade I have done lately. My focus here at the moment is to minimize the loss on this position and try and profit on a breakout above 5400 or unhedge and hope for a decent reversal down so I can profit whatever little I can. The way I see it, NF being between 5400 and 5100 by Aug expiry means not a significant profit for me. NF in dead center around 5200-5300 by expiry will mean a small loss.

[p_wangdu]

meri samaj se bahar hai (personally) since trading in my career ...ab bhi options hamare jaise dehati indian down to earth logo ki samaz se bahar ki baat hai ... Swing Trader sirji thanks for boosting sentiment thums-up to you

[SwingTrader]

[SwingTrader]

Status still the same....intermediate term sentiment continues to be bearish whereas the price trend itself is bullish. Long term sentiment dead in the water, going nowhere. Waiting for something to happen....

One thing on options sentiment chart. Even though it looks as though we are at an extreme, there is a not so remote chance of one more push up for the price. So a push above 5400 is possible. This will really take options sentiment to a good extreme. Just have to wait and see what happens.

I have not managed my current trade well (ITM 5400 PUT). Failed to pick up options sentiment extreme (before the start of up move). Now I am in an uncomfortable position trying to get out of the trade. The hedge I took on 6th Aug is what is holding my trade together. As I said before, a move above 5400 will make my put + hedge combo profitable which is when I will probably exit my trade to save whatever time value I have in the put (and then re-position myself for next month's expiry). A reversal down from here will hopefully bring price trend and sentiment in sync but I will remove my hedge only below the low of 10th Aug. Can try these gymnastics only for a week more, I will not take this trade into expiry week when I will start to lose time value faster due to big expiry week theta on ITM PUT. At that point I will exit and re-position myself in next month's expiry still staying in line with sentiment.

[SwingTrader]

I am seeing some shift in control of options today, just thought I'll post it. Is the bearish move starting? Not sure but today's shift in options data seems to indicate this. Let us see how it goes from here....

I am going to stay in line with options sentiment so I have rolled over both my PUT options and hedges to Sep expiry. Moved from AUG 5400 PUT to SEP 5500 PUT. I am hedging using NF futures, moved the hedge also to SEP futures contract.

I have over hedged slightly to the bullish side since the 6th Aug gap up as things have been bullish. This was to balance out the probable loss in the puts. I am still over hedged to bullish side and will adjust the hedge as we turn more and more bearish bringing my put into greater play. I will let the price decide...

[vinay28]

ST, I feel you may not regret leaning on bullish side. Good luck

[SwingTrader]

[rk_a2003]

[vinay28]

yes, volume is a worry and I am not able to track ratio of cash to f&o vol (in INR) in our markets over last few months