August 31, 2020

Margin and trading exposure applicable from 1st September 2020.

The changes bought out by the above circulars have been summarized below for your ready reference:

1. Upfront margin is required to be deposited with the broker before entering into any new trade or taking any new position.
2. MTM requirements are required to be fulfilled by T+1 day in case of Derivatives Segment and by T+2 day in case of Equity Segment.

In view of the above, from 1st september 2020 onwards no trading exposure shall be allowed on the following unsettled values since the same cannot be  considered towards upfront margin.

1. Intraday Profits
2. MTM arising from C/F to B/F futures position.
3. Net Options premiums sold.
(except against Options Buy)
4. No BTST Trades 

Amidst the above restrictions, clients shall however be able to use the sell credit of the demat holding stock so sold towards any new position from T day itself.

The M-to-M losses can be deposited by you on up to T+1 day for derivatives or T+2 day for Equity, within the timings as specified by Upstox from time-to-time. Shortfall, if any, shall be liable to penalties at the rates so prescribed by the exchange from time to time.

The changes are explained below in detail -

1. Intraday Profits (all products):

Profits from Intraday trade will only be available after settlement from exchange.

For example - Suppose you bought 100 Shares of X Ltd. for Rs. 1,00,000 on 01/09/2020 and sold the same for Rs. 1,12,000 on the same day leading to intraday profit of Rs. 12,000. In this case if you wish to buy any new shares, you shall be able to purchase the new shares only to the tune of Rs. 1,00,000. (This is because the intraday profits earned to the tune of Rs. 12,000 falls under unsettled funds)

The above example shall also be valid for intraday profits earned in the derivative segment.

2. MTM arising from C/F to B/F Futures Position

For trades related to C/F to B/F Futures, profits made by selling the position will be available after settlement by exchange.

For example - Suppose you had bought a Futures contract on 01/09/2020 for a margin of Rs. 1,00,000. On 03/09/2020 the MTM profit is Rs 10,000 post square off. You would not be able to use this MTM profit of Rs. 10,000 on 03/09/2020 to purchase any new position and margin of Rs 1,00,000 will be available for any fresh positions.

3. Net Options Premium Sold....https://upstox.com/announcements/

NIFTY options open interest chart

- limited upside seen

- highest OI is seen at 12000 CE

- highest addition is seen at 11600 CE

- unwinding seen in 11500 and 11600 PE





NIFTY intraday charts

5 min:

NIFTY + BANKNIFTY monthly charts

- this weekend I posted the monthly chart for nifty
- I wrongly assumed the month was over
- and I said what difference would a day make

- how wrong was I
- as nifty fell 400 points intraday

- here is the monthly chart
- this just shows selling at higher levels

- fall of March has taken 4 months for retracement
- no other conclusion



BANKNIFTY charts:
- index unable to sustain above 24000


NIFTY EOD charts

- trend is up on daily charts
- today nifty was up 1% initially but finally closed 2.3% in negative at 11387
- intraday fall was 400 points
- resulting bar is now a HUGE bearish engulfing bar

- so we have a very clear top in place around 11800
- and 12000 remains a strong resistance

- AD was 1:5
- VIX shot up 27% to 23.3

- markets were long overdue for a correction 
- and high PE ratio is just not suitable for new long term investors
- however I was surprised by the intensity of the fall

- some people say it was due to SEBI margin rules
- but this was in public domain for a long time and is not anything new

- swing low support around 11000
- till this breaks nothing to worry
- but PE ratio is this level will still be uncomfortably high



Short term pleasures can lead to long term traps

August 30, 2020

NIFTY weekly + monthly charts

- trend is up

- swing low 11000

- big resistance 12000

- entire fall  of March is fully retraced

Weekly charts:

Monthly charts:

BANKNIFTY charts

 - trend is up

- nice breakout this week

- on hourly charts, breakout happened on 24-AUG

- this was also the day when BNF futures had open = low

- next resistance 26500



Transaction charges in options vs futures

- futures trading is very expensive thanks to high charges

- in this example, I considered a nifty trade in futures and options

- brokerage is Rs.40 (buying and selling)

- excl brokerage, charges for futures is Rs.150 vs Rs 27 in options

- options trading is super cheap

- note I am ignoring time decay risks here

- source - zerodha calculator




August 29, 2020

Why invest and forget is bad for the economy

August 28, 2020

NIFTY intraday charts

5 min:


15 min:



BANKNIFTY breakout

- index underperformed the nifty

- now it is playing catch up

- up 4% today

- here is the 30 min chart (fut)

- the breakout started on 24th...


And here is the EOD chart for perspective


NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 0.8% in positive at 11655

- AD was negative at 7:11

- VIX down 3% at 18

- NIFTY PE ratio at 33



August 27, 2020

NIFTY intraday charts

5 min:

- rangebound trading day

NIFTY EOD charts

- trend is up on daily charts
- today nifty closed flat at 11560
- AD was flat

- support 11000
- next resistance 12000



August 26, 2020

NIFTY intraday charts

5 min:

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.7% in positive at 11550

- AD was 5:4

- past few days, breadth is positive but not very strong



August 25, 2020

NIFTY intraday charts

 

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed flat at 11472

- AD was flat


August 24, 2020

NIFTY intraday charts

 5 min:

- open = low


BANKNIFTY up 2.4% today....

- today Open=Low


NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 0.8% in positive at 11466

- AD was 5:4 (positive but not good)

- VIX down 4%


August 23, 2020

NIFTY future profits when Open = High or Open = Low

I did a study of nifty futures data and analysed what happens if one takes a trade whenever nifty future  open equals the low or high.

Idea is to take a trade within 5 minutes and close at end of the day.

Data analysed is from 2-AUG-2018 to date and has 501 trading days.

There were total 32 trading days where nifty future had open=high or open=low. 

Total points gained were a stupendous 2400 points. 

Of course, all this is in the past and profits in future will obviously not be the same.

But as a strategy it makes sense to trade these days blindly with an SL...risk reward is likely to be awesome.

In fact, one can do this analysis for all FnO stocks and get even more opportunities.

August 21, 2020

NIFTY intraday charts

 5 min:

- extremely rangebound market

- past few days, markets unable to sustain outside the range

- all breakouts (up and down) are failing

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.5% in positive at 11372

- AD was 2:1

- today was an extremely rangebound day 

- price action was similar to what happened in prev 2-3 days (see intraday charts)


August 20, 2020

NIFTY intraday charts

5 min:
- extremely rangebound day
- we had a gap down and follow thru selling
- intraday breakout above AND below initial trading range failed
- effective trading range was 40-50 points
- similar like prev day...nothing to do


15 min:
- today nifty is at same level as it was 10 days ago



NIFTY EOD charts

- trend is up on daily charts
- today nifty closed 0.8% in negative at 11312
- AD was 5:4


- swing low 10900


August 19, 2020

BANKNIFTY charts

 - BNF is underpeforming the nifty

- struggling to cross 22400 F


NIFTY intraday charts

5 min:

- narrow day

NIFTY EOD charts

- trend is up on daily charts
- today markets closed 0.2% in negative at 11402
- AD was 2:1

- trading range was very small ~ 50 points

- option writing support 11300 res 11500


History of stock market crashes

 Source: WA forward

Image

August 18, 2020

NIFTY options open interest

- highest OI at 11300 PE

- next highest OI is at 11400 CE

- tussle between bulls and bears likely to continue


NIFTY intraday charts

5 min:


NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 1.4% in positive at 11385

- AD was 5:2

- swing low/ support 10900

- NIFTY PE ratio is now 32... is it different this time?


August 17, 2020

Stocks at 52 week high

 BAJAJELEC

BAJAJELEC chart

NIFTY options open interest analysis

 - there has been an increase in OI of OTM puts

- fall in OI of calls seen

- highest OI is now at 11000 PE

- in calls, highest OI is at 11500 CE

- overall bias is mildly bullish



BANKNIFTY support and resistance levels

 5 min charts:

NIFTY support and resistance levels

- today nifty traded in a very small range

- trading range was well within the body of Friday's red bar

- key support and resistance levels are as shown in the 15 min chart

- note there has been very heavy supply around 11400 levels

- this is also reflected in option writing levels

- support is developing around 11000

- option writers are bullish this will not break this month


NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.7% in positive at 11259

- AD was 2:1

- inside bar formed

- trading range was very small


August 15, 2020

NIFTY options open interest distribution

- limited upside seen

- highest OI at 11300 strike in calls and 11000 strike in puts

- 11000 is expected to provide support this month....let us see



NIFTY weekly charts

 - trend is up

- flat movement for almost a month

- consolidation?

- PE ratio at 31

- crucial support 11000


BANKNIFTY charts

- index is clearly a non performer

- trading sideways for quite some time

- index is flat for more than 3 months

- support 20900


August 14, 2020

Thread on antifragility, convexity, fat tails and payoffs

NIFTY intraday charts

 5 min:

- finally a nice trending day after many days

- was short on break of 11300

- holding deep OTM puts (positional)

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 1% in negative at 11178

- AD was almost 1:2 

- VIX up 6%


- today was the biggest one day after 7 trading days

- in fact on 21-JUL, nifty was at 11162

- so net gain to date is not even 20 points


- swing low support 10900


August 13, 2020

Brokers with most clients

 

NIFTY intraday charts

 5 min charts

- today was expiry day

- option writing suggested support at 11300 and resistance at 11400

- break of initial trading range did not attract much selling

- market was rangebound rest of the day

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed flat at 11300

- AD was 10:7

- narrow trading range

- trading bars are so small that one has to struggle to see on EOD charts

- this volatility compression will eventually lead to a big expansion


August 12, 2020

How to trade cash stocks intraday

 

NIFTY intraday charts

5 min

- valid buy signal

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