Friday, 8 June 2012

Paper Trade 08062012 - Nifty Options 5100CE 28-Jun-12

Nifty is negative today. Parabolic SAR has signalled an uptrend on June 6. This is the 3rd trading session where Nifty has been above PSAR. But in the recent past (3 months) , there have clearly been 3 PSAR false positives which lasted for a maximum of 4 days.

So what do we infer from the current signal?
I don't know. That is why I am naming this post as paper trade to track my own strategy. If the signal given by PSAR holds true we can see an upside of at least 150 points on the Nifty.

In this paper trade, I am betting my virtual money on Nifty 5100 CE June Expiry which is currently trading at Rs. 50. I cant hold a stop loss or target for Options trades. People do give stop loss or target for Options trade, but I feels it ridiculous.

Option prices have a direct correlation with the underlying contract prices (in this case, Nifty). So I'll give stop loss and target for Nifty. I will trade in Options accordingly.

I recommend buying 5100 CE Jun-Expiry at CMP i.e. Rs. 50.

Indicative Stop loss of Nifty is 4900 and target is 5150.

UPDATE: I also observed that PSAR is giving this uptrend signal long time after a 20-day and 50-day SMA negative crossover. This can also signal that the bull phase of these SMA's may start with this PSAR signal and then they hit a positive crossover very soon.Who says SMA is a lagging indicator. ;)

Disclaimer: Don't go and trade just because I am writing something here. Use your brains and don't hold me liable for anything. :)