US Mkts. & Indian correlation -Short Term Bullish, Long- Bearish
S&P 500, taking a support at the weekly swing levels of March 2021..
3945 is the level... Look at the long wick it made on the downside in this week's candle..
Seems the market is taking support at that swing level...
But taking a deeper dive into the daily chart.. market is heading higher but it is appearing to be heading towards making a lower low, which will confirm if this is a Down trend continuation or the market has finally made its bottom..
For now, it seems it is short covering, profit booking, & buying the dips!!
What's the best way to trade-
NO TRADE if your Risk Appetite is LOW...
&
If you are ready to take risks..- THEN..
How to select expiries - More Risk appetite - Weekly Expiries
Less Risk appetite - Monthly Expiry and Far Month Expiries
1) Selling puts below the current bottom... in US as well as Indian context.. but with strict hedging giving small scope for losses..
Further plan- A) If market goes up SLOWLY .. book your profits.. shift the put selling and hedge upwards..
B) If market moves up fiercely ... Sell calls on rise with strict hedging again... and increase the Put selling quantity
at the SAME STRIKE as earlier...
What will happen due to this? - The call sold with hedges will give limited loss but that loss will be partially compensated by
the new quantities of Puts Sold... and if the market reverses.. as the earlier strikes are far way.. so, we will get profits in the
Calls sold and puts as well... And if the market reverses fiercely increase the quantities of Calls Sold as well!!
2) Buying In The Money Calls and selling OTM calls... (Only DO this if your time horizon is Long Term)
For example (INDIAN CONTEXT) - Buying 15000 CALL @ 836 {26th May 2022 Expiry}.
Selling 15500 Call @ 433 {26th May 22}
This will give breakeven of 15400... as it is an important swing level
Further Exit and adjustment plans -
A) If market moves up swiftly - we can add calls selling (FAR OTM) to increase our profit..
B) If market falls swiftly - and we and up in loss, we need to keep rolling over like investments..
3945 is the level... Look at the long wick it made on the downside in this week's candle..
Seems the market is taking support at that swing level...
But taking a deeper dive into the daily chart.. market is heading higher but it is appearing to be heading towards making a lower low, which will confirm if this is a Down trend continuation or the market has finally made its bottom..
For now, it seems it is short covering, profit booking, & buying the dips!!
What's the best way to trade-
NO TRADE if your Risk Appetite is LOW...
&
If you are ready to take risks..- THEN..
How to select expiries - More Risk appetite - Weekly Expiries
Less Risk appetite - Monthly Expiry and Far Month Expiries
1) Selling puts below the current bottom... in US as well as Indian context.. but with strict hedging giving small scope for losses..
Further plan- A) If market goes up SLOWLY .. book your profits.. shift the put selling and hedge upwards..
B) If market moves up fiercely ... Sell calls on rise with strict hedging again... and increase the Put selling quantity
at the SAME STRIKE as earlier...
What will happen due to this? - The call sold with hedges will give limited loss but that loss will be partially compensated by
the new quantities of Puts Sold... and if the market reverses.. as the earlier strikes are far way.. so, we will get profits in the
Calls sold and puts as well... And if the market reverses fiercely increase the quantities of Calls Sold as well!!
2) Buying In The Money Calls and selling OTM calls... (Only DO this if your time horizon is Long Term)
For example (INDIAN CONTEXT) - Buying 15000 CALL @ 836 {26th May 2022 Expiry}.
Selling 15500 Call @ 433 {26th May 22}
This will give breakeven of 15400... as it is an important swing level
Further Exit and adjustment plans -
A) If market moves up swiftly - we can add calls selling (FAR OTM) to increase our profit..
B) If market falls swiftly - and we and up in loss, we need to keep rolling over like investments..