After many weeks of correction, the market got a reprieve last week, along with signs of convergence between the main market and mid-cap stocks, as the former moved up and the latter stopped fallin
As the market moves in a range-bound mode and generates expectations of sharp counter moves on the second day, traders are advised not to sell out-of-the-money options to collect small premiums.
Usually, both index and individual stocks show stable movements in the first week of a new derivative series.
Down one day and up next day. Probably, last week’s Nifty movements served another reminder to traders that generating trading return is not easy in certain phases.
Most investors look at the benchmark indices to know how the stock market is faring, and accordingly take a call on entering or exiting the market.
The way the May series ended, scaring the bears away from the Street with more than one per cent increase just hours before the expiry of contracts, shows the bulls are not in a mood to cede ground
While options are a good way to take exposure to equity indices and stocks, in some scenarios, they practically become the only route for equity exposure.
The Nifty ended with marginal gains last week. But that hides the weak momentum of the market.
Probably, every trader would like to see higher volatility in the market. But when volatility comes, as it did last week, the traders would be the first to run for cover.
Till the week before last, neither call options nor put options buyers could make any money because of the benchmark index’s range-bound moves.