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. :)

2 comments:

  1. On 8th June, when Jun 28 5100CE was trading at 50 I entered a paper trade after Nifty's chart was giving positive upside signs. Today 5100CE is trading at 106.. Up 100% from my paper trade. If it would have been a real trade, this trade would have doubled my money over the weekend.

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  2. And the winning streak continues... Yesterday S&P pulled up a crazy stunt of downgrading India causing markets to lose its intraday gains. But I was positive on the market 5100CE closed at 68 yesterday after touching 110. Markets opened in the red today but recovered pretty soon. Lets see if my target for Nifty of 5150 holds true. Fingers Crossed.

    5100 CE is back at 110.

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