Apr 24, 2009

Option strategy for May 2009

The expiry this coming Wednesday should be between 3300 and 3500.. Option strategy for May..

For each basket,
Sell 3600 CE - 1 lot
Sell 3400 CE - 1 lot
Buy 3200 PE - 2 lots
Sell 3000 PE - 1 lot

My market view remains that upside from here is limited contrary to the popular belief that markets are headed straigh-line to 3800 /4000 levels. One's gotta play the game cautiously here... Even if markets do head further up from here, the rally shouldnt be sustainable. I'm considering the following scenarios:

Scenario 1: Markets just drift around with high volatility.. 
Scenario 2: Markets take an immediate downturn towards 2800-3000 levels.. consolidate there and start moving up on once there is clarity on the political situation
Scenario 3: Markets move up to 3800 levels pre-election clarity.. lots of retail participation and leverage getting built into the system..Then....a) election outcome is a BJP/Congress led coailition and people sell into the rally to book profits.. markets come down to 3300-3500 levels slowly and we follow global cues b) election outcome disappoints and, if enough leverage is in the system, we get a lower circuit.. come down to 3000 levels eventually and then start following global cues..
Scenario 4: The positive global sentiment is sharply dampened..and markets get more complicated than a simple play around elections..

I'm running a hedged portfolio right now with low exposure.. More updates later.

No comments:

Post a Comment