Stocks To Keep A Close Eye On

[MurAtt]

@SG

This change in the options structure from Jan-11 ... i.e the stock options will now become European ... don't you think its a bit harsh on the retailers ... now once it goes deep in the money and you don't have buyers .. and you can't exercise .. and by expiry it comes back to cost or even lower ..

What do you say .. what are your views and how to outsmart SM (not me ) on this one ...

 

[U know me ?]

I need your views on TULIP Telecom .I have been holding
this stock for good fundamentals for a long time now(Bought at 195, CMP 170)
I thought the The valuations are decent, mgmt is good and its a leader in its segment .But market does not seem to value it. The volumes are pathetically
low and no wants to buy it. Should I exit it or hold it for what target till end of Dec?

Also Can anybody suggest a good books on technical analysis which would
give me some idea about these questions ?

1. I pick a stock based on fundamentals , I do not have much idea about technical analysis. How to find the support and resistance of a stock.?
   
2. How to make sense of F and O data. If there is a lot of Open Interest (which i see on the NSE site on particular call or put strike price )?
   
3. What are the tools professionals traders use and what is the benefit of them.Can a retail small trader using sharekhan can access them?

Thanks

 

[rajeabc]

@SG

This change in the options structure from Jan-11 ... i.e the stock options will now become European ... don't you think its a bit harsh on the retailers ... now once it goes deep in the money and you don't have buyers .. and you can't exercise .. and by expiry it comes back to cost or even lower ..

What do you say .. what are your views and how to outsmart SM (not me ) on this one ...

SM ,
Where can I get more details on this news?
---

will not the contract be disabled from trading / I have seen many contract getting disabled due to low volume ?
Will it have affect on volatility ?

 

[deneb]

Please check the below link

http://www.business-standard.com/india/news/nse-to-pitch-european-options-against-bses-physical-delivery/413187/

 

[SavantGarde]

Hi SM,

In a way it is good....because it will give BSE & other exchanges to come online to give American type options...

By the way....our Index Future options are European...we are still able to trade anytime before the expiry....

Yes...European at expiry will need to be settled through exercise... but doesn't mean it can't be traded before the expiry....

SavantGarde

@SG

This change in the options structure from Jan-11 ... i.e the stock options will now become European ... don't you think its a bit harsh on the retailers ... now once it goes deep in the money and you don't have buyers .. and you can't exercise .. and by expiry it comes back to cost or even lower ..

What do you say .. what are your views and how to outsmart SM (not me ) on this one ...

 

[MurAtt]

Hi SM,

In a way it is good....because it will give BSE & other exchanges to come online to give American type options...

By the way....our Index Future options are European...we are still able to trade anytime before the expiry....

Yes...European at expiry will need to be settled through exercise... but doesn't mean it can't be traded before the expiry....

SavantGarde

No .. what I asked was specifically for Stock Options ...

Like say my IFCI 60 PA ... which I had bot when trading at 63. At 55 .. for instance there would be no takers .. then ? Now price is at 58 and by next week say 62 again .. and I am at a loss .. at least on 55 if there are no takers .. I can exercise it .. BUT for European options even that option is out ...

Next is what .. to kill the retailers ....

 

[rajeshn2007]

No .. what I asked was specifically for Stock Options ...

Like say my IFCI 60 PA ... which I had bot when trading at 63. At 55 .. for instance there would be no takers .. then ? Now price is at 58 and by next week say 62 again .. and I am at a loss .. at least on 55 if there are no takers .. I can exercise it .. BUT for European options even that option is out ...

Next is what .. to kill the retailers ....

SM,
valid point. we have discussed this before.

the only option to protect the profits is to take the counter position, say buy ifci futures at 55.( which involves more margin and holding the position till expiry)

 

[SavantGarde]

Hi SM,

Let us first see all the rules being outlined by the exchanges.... just because it becomes Eurpean doesn't mean it has to follow exactly...there might be some tweaking... but we will not know till NSE lays out the whole outline for the same....

Suggest don't press any panic button..yet...as it is our options market is not even 5% of the advanced markets....and is very lopsided

SavantGarde

No .. what I asked was specifically for Stock Options ...

Like say my IFCI 60 PA ... which I had bot when trading at 63. At 55 .. for instance there would be no takers .. then ? Now price is at 58 and by next week say 62 again .. and I am at a loss .. at least on 55 if there are no takers .. I can exercise it .. BUT for European options even that option is out ...

Next is what .. to kill the retailers ....

 

[amit_15]

SM,
valid point. we have discussed this before.

the only option to protect the profits is to take the counter position, say buy ifci futures at 55.( which involves more margin and holding the position till expiry)

But, this won't protect all the profits.....only some?

Now, assume if have bought IFCI PE(from January onwards) 60 at Rs.2 for a total of Rs.8000. Now, price of IFCI goes from 65 to 55. Then we buy IFCI futures at 55 . But, then IFCI finishes at 60 on expiry. So, we lose the premium of Rs.8000. But, we gain on futures for a total of Rs.20,000 (Rs.5*4000) - Rs.8000 = Rs.12,000. Out of this, we have to pay for brokerage costs plus expiry cost. I think STT on expiry is quite large... so perhaps there will be much less profit?

So, with the new PE system from Jan, perhaps we can assume that profits will be halved. Because, exercising at 55 would mean Rs.20000 profit. But now, profit is Rs.12000.

Apologies if figures above are incorrect. I am still learning options.

 

[MurAtt]

Yes

BUT

American Options will also continue ... writer has choice ...

Also ... we would then find bcoz of this choice .. that European Options would be priced cheaper bcoz of this drawback maybe ... (of course this is just plain thinking from me now) and we can

Sell PA and Buy PE and pocket the difference except that if PA is assigned then it will be a pain in the axx OR maybe I am thinking like what my initials stand for

And yes ... it will be a pain in the axx for checking OI .. PAs and PEs ...

SEBI .. simplify please .... @SG .. start a petition or do we directly contact your friend Mr Bhave and threaten him with dire consequences joking