Elliot's Impulse waves.(Part-5)
IMPULSE WAVES :- The Basics Waves that move the market in the direction of its main trend either up or down are called Impulse waves. 1....
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5010-5039 supply zone proved a ST resistance. 5002 proved a break down point. 4945 to 4982 proved a corrective rise, monitored with an ...
9 comments:
On Tue, Oct 4, 2011 at 1:51 PM, Anuj Joshi wrote:
Hi Richard ,
Got your e-mail ID fro Dinesh Rishi
If I remember correctly you trade a strategy, in which you hedge a portfolio of stocks with call writing?
I am also planning to make a portfolio and do option writing.
Can you provide some information regarding it and share your experience ?
Some questions that come immediately come to my mind are :
1) Do we trade the portfolio of stocks or keep it for the long term (greater than 1 year)?
2) Which strike prices to consider for call writing ( ITM, ATM or OTM )
3) Which month option to consider this month, next or far month
4) What should be the approximate portfolio size for hedging with one nifty(50) call?
5) Do we keep stop losses on both portfolio stocks and short call option?
Sorry for asking so many questions, I will be glad if you could answer these.
Please reply at your leisure
Regards
Anuj Joshi
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richard dias Tue, Oct 4, 2011 at 6:35 PM
To: dineshrishi
On Tue, Oct 4, 2011 at 4:23 PM, richard dias wrote:
Dear Anuj,
i used to do two year back hedging with call writing but now as lot have changed with the coming of advanced trading system and traders who punt around in options.Now option writing is controlled by very big players who have big deep pockets to manage the wild swings both ways. And in options now u need to trade it regularly as compared to before where we use to see and dream of eating premium at expiry, seriously now it only increases tension and nothing else.
I can share with u the stratergy which u can use to build your portfolio and still earn handsomely by doing intraday trades against the stock with futures.
1 step try to accumulate now any high beta stock my preference Coal India / (more conservative choice reliance as i personally have large holdings and trade regularly in it )as it is good company and have fallen much which will out perform the indices by big margin once the sentiment turn positive. Accumulate either of these stock in stepwise sip equivalent to its lot size in fno.
2.U are already aware of SAR method so utilize it go short in futures against you portfolio once the signal gives short and take profit on shorted future once it reverses that time your portfolio starts to perform and then again lock the portfolio by going short with futures refrence being the sar signal.You can chose any time frame u need depend upon u for trade.I play hrly to hrly signal. use your profits from futures to add more stock in your portfolio on big dn day there by giving it the compounding effect to your returns.
In case you are not comfortable selling future you can chose to buy puts to hedge portfolio ITM or sell calls deep in the money to save you from extreme downside risks.
otherwise you just sell 50% of your portfolio stock once signal is short and buy back again when it reverses.
3. you can choose to sell OTM calls as bonus once the signal is short and OTM puts when long.You need to sell far away strikes to avoid any stress as these sometimes tend to limit your profits if you go wrong.
4. stoploss not requied if you trade against your portfolio as both positions will negate the effect of making a loss.Maximum u will not earn anything thats why u combine it with sar to maximise the gains with correct entry and exit points. easier said then done:) but with SAR it works well.say u have 500 cash reliance ie 2lots in future.Go short with one future once sar triggers and add one when confirmed so in that way u avoid the whipsaw also.
I call this stratergy milking the cow :)considering stocks are your cow which gives you milk everyday and u dont want to sell it ever. If u follow this method less than six months u make ur portfolio free ie u double ur money.
Happy trading :)
regards,
Richard.
Master,
An amazing observation! And it helps a lot to smooth up the small glitches in the waves too. Perhaps 4th finished@5169 and the fall to 4911 was the a of the 5th, which is taking form of an Ending Diagonal! That would fit nicely with the much extended 3 too.
That would also imply that this is the last leg of the fall going on, which can finish after making a false breakdown below the a-c line, which will perhaps also meet the minimum tgt of 4626 as shown by you.
Please excuse my excited ramblings.
Does Nifty want to go, further down, from here onwards?
Relentless selling by FII in cash and index future.
Good 10 lac addition in 4800 CE,but no deletion in 4800 PE though Nifty slipped up to 4728,instead, good 8 lac addition in 4500PE.when Monthly,Weekly and Daily Pivots are around and @ 4790 and critically closed @ Hrly.Pivot.
Lead indicator in highly oversold mode & 14 Hr.Rsi near highly oversold, but who knows, it may remain oversold.
I have marked Dear Ilangos, comment @ 2.29PM i.e.
“The week has turned down last week along with Day. The testing time is tomorrow. If today's close is below WLEma, it would add to the 5th scenario.
When prices retrace a particular fall faster, that would give an early clue. Till then stay with the Pref. view.”
Namaste Ilango Sir & Blogmates,
Another round of Selling by FII’s, Nifty is going down the Elevator: Option Analysis for 04-10-2011
Duplicated at Wordpress Site
Thanks & Regards,
Sanjay Kr Jaiswal
@Fire could you please tell about what observation you are talking about.
@Mynac,
Very valid points from you as usual. I am also staying absolutely with the preferred view as Master said. But my greed, my uncontrollable greed! It looks at the VIX. Then it looks at the Slow MACD above, and calculates that IF Nifty takes a U-turn from any point below 4720, say 4650 or 4625, what a BIG positive Divergence would emerge! And if gets confirmed by price by breaking out of the Wedge, what a HUGE move it can bring on the upside!!! Slurp! :P
@shivanGupta,
I was talking about the Falling Wedge. It is there for a long time now, then how could I miss it? Master's one Title of this EOD post made so many things clear to me.
Nasdaq zoomed up in last half hour from -30 to +70 very sharply.
The News for bulls arrived - "European Union finance ministers are examining ways of co-ordinating recapitalizations of banks"
-stockgrp
US markets reversed 5% from the lows... Nifty Spot likely to gap up above 4830 and slight chance may be even 4875.
Sir,
I am most impressed with trading philosophies can you pls submit your email ID so that i can clarify
my doubts
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