Newton Challenge Day 2: 14/11/18

Engineer’s Ind Weekend Strategy

Short if it breaks the low of the previous day with a stop loss at the previous day’s high.

In case of gap up above the previous day’s high or gap down below the previous day’s low, please avoid buying it or selling it respectively. Follow the ending of the candle formed in first 5 minutes and follow ORB strategy.

SBIN Vega Stripping

Short 280 CE at 7.75

Expecting SBIN to move between 273 and 283 tomorrow and the next day. Assuming vega contraction of call options we are likely to make a profit of 11,110 to -3,000 in two days due to vega stripping! (Vega got inflated today due to sudden BankNIFTY move at the end of the day.)

Hence, Hard stop loss at -6,000. (Considering IV effect against our favour)

The holding time is strictly two days unless specified.

Aftermath -

SBIN opened huge gap up because of the news of RBI’s money infusion. So initially I thought to cancel the trade. Then it is also that when the news will be declared on 15th i.e tomorrow SBIN won’t be getting any money. Bank Baroda and other peers will.

So I sold it and luckily got higher premium. Right now it is still a hold till EOD tomorrow.

Engineer’s India gave a perfect trade!