What does big event mean? Like the budget is coming, now you all know that every year February1st means on the first working day of February, you see that the budget is announced. India’s budget means every company will be affected by that budget. Every company that is earning money, doing business, will be affected by that budget.
So now the budget has become a big thing. Similarly, if the result of an election is coming or if any big result is coming or if big event is happening, then what happens around the event, a big move is expected in the market. Now I will talk about beginners first. Now listen carefully. What does a big move mean? Big move means that the market is going on, so it can go up a lot or it can fall a lot.
So you can see an example if you are trading in Nifty, then youkan sees a move of 300-400points, you are trading in Bank Nifty, you can see a move of1000-1200 points and what to say about the rest of the stocks, I am not talking specifically about the stocks because you can see a big move in the stocks. Now because a big move can come, then a big money can be made. We all understand that when a big move comes, the market will move, then if your directions right, then money will be made more.
Now how will it be if I tell you the directionless strategy first, it means we are not talking about whether the move will come up or down, we are talking about whether it is up or down, both sides should be made money. Now for this, I am assuming that you have some basic understanding of options. If not even that, then you will have to read all the blogs of my options strategies.
I will give you the full playlist on the end screen so that you can learn more about options. But okay, now what we want is that I catch a big move. If I catch a move of 1000 points in Bank Nifty, it will be fun, but now what happens is that I have to understand this and I will also tell you the current market situation and as I said, I have to tell you the strategies.
So now what does the big event mean that something is going to happen in the market. Whenever something is going to happen in the market, it means that volatility increases in the market. The volatility I am writing; how do we know this? Either you see the symbol IV in the options or you see the value of India Wax and from India Wax you know how much volatility is. Now the most important thing is that before a big event or around a big event, our expectation is that the value of India Wax should increase and generally what is the expectation of people that when the market falls, only then the value of India Washouts up.
That is basically a wrong assumption. When the market falls, then you will see that India Wax is increasing, but this is not always true. India Wax basically calculates volatility in a way that how much is the chance of something getting bigger in the market. Now we come to the screen, I will show you some things. I will take the full time. You do not have time, save this blog and read it later, but the problem is that people have very little time for attention in today’s date. If you want some deep understanding, then I will tell you to make notes.
I will also tell you that whatever I will tell you, I am telling you after an experience that it can take time, so let’s understand it. Now we come to the screen so that we can see everything. So now I am on the screen in front of you and we simply go to Google and write India Wax’s soon as you see India Wax, you see that India Wax is 13.79. Now understand my point, whenever there is a big event, then at the time of a big event, India Wax should increase.
This is an assumption. The second thing we said that India Wax increases when the market falls, but if you look carefully, the value of India Wax is 13.79. India Wax has been falling in the last 5 days. Now if I show you Nifty here, which was your assumption that India Wax value should increase in the last 5 days, then basically even now if the market has been corrected a little, then even after correction, it is not that India Wax value has shot up very quickly, but now what is my assumption, I tell you that Nifty is somewhere now. In fact, you are seeing that India Wax is also somewhere.
The value of India Wax, which is 13.79, is an assumption that around any big event, India Wax value shoots up. Now if it shoots up, let’s say it reaches from 13.79 to 15, 16,17, 18, 19 or 20, then what will happen, first I will explain it to you. As India Wax value shoots up, you simply go to the NSE option chain, then you go to the option chain and see the data of the options. So this NSE option chain opened. Just a second, I will zoom in and show you.
So here is a very important thing, see it is written above, IV, here IV is written. On both sides, you will see IV on the call and put side and there is a value of IV, so you can see here that this is the price of add the money, Ivies running at 11.25, so you see the value of IV. Now this concept that I am telling you is very important. As soon as you see the increase in Wax, you will see a change in IV along with Wax’s soon as the IV increases, the premium of the option will also increase.
So if IV increases from here, for example, we are talking about current expiry, you can calculate it, if you say, then we can make a blog on it in detail. Now I have to give you strategies in short, so there is no blog on it, so I will not take much time.
You assume that you are talking about the expiry of next week, so we all know that the budget will come on 1st, so if I talk about the expiry of 2nd, you can see here tattle is 200 and here you can see that it is 176, but if the Ivies seen from here, from13.
something, if it is 17, then about 40-45 rupees will increase without doing anything on both sides. Means the premium of call and put is 45 rupees, even if Nifty does not move, it will happen.
I will write it down and explain that it is for example, you have just seen that I gave you an example, if the IV increases, if the IV increases, you have the value of IndiaVix ,as I said, if the value of IndiaVix increases, now you are seeing13.7 and from here youkan calculate that it will be 17, so you will see that this is around 200 rupees and thesis around 175, call and put, this will increase by 45 rupees without the move of Nifty, both of them, this will be of 245 rupees straight away, why?
Because 45 rupees, so here the premium has increased due to the increase in volatility. Now, what we have heard so far is that whenever we buy options, then theta is not in our favor. If we talk from a buyer perspective, then theta is against us. As time moves, our price of options will be low because the theta in it is finished, but the IV is in the buyer’s favor.
Why will this increase by 45 rupees? Because IV has increased. Now what is the benefit of this? That the theta does not have much effect, the volatility is increasing and if the move comes from here, we just talked that I will give you a beginner strategy in which we will take a non-directional strategy.
Non-directional means I do not know whether the price will go up or down, I know that the shoot up will come somewhere. Now if you feel that the shoot up will come somewhere, what can be the reasons for that, we will discuss about this in the next blog.
So you will see one thing that the price has gone up from here, this 245 would have happened when Nifty does not move. If Nifty moves, then its intrinsic value will also increase. So this option maybe of 245, it may be of300, 345 and it may increase more, but this 175 plus 45 has increased anyway.
You will see that if you buy it for 175, then it may increase to 100. because of the reason that here the IV has increased and the second thing is that despite it will not break much.
Why it didn’t break, it didn’t break being non-directional, you will be in advantage if you get a move in one direction. So what is the strategy for this, now we will talk about the first strategy. This is the first strategy. I said it is a beginner level strategy. Now whenever you see this, see the strategy that I am going to give, we just don’t use it on Friday.
Avoid it on Friday, Monday, Tuesday, Wednesday, Thursday, you can use this strategy and this strategy I am repeating, whatever strategies will give you now, these strategies are strategies for big events. Big event means you understand that something big should happen, some news should come, something big will happen, so these are strategies for big events and it can benefit you.
Now in big event, my first assumption is that the IV will increase and if you are buying the option in less IV, then it means that your purchase is cheap. In this, the seller can be at a loss. If thieve increases, then it is a loss for the seller. If someone sells the option, then I will not specifically suggest that you use any option-selling strategy before any big event.
Therese is up to you. So my suggestion is that during the time of big event, there can be loss while selling because the loss can be unlimited and the benefit can also be unlimited. So now let’s understand this. Now he is hedging, so it is a different thing. I have given you hedging strategies, but now we are specifically talking about first strategy.
We are not using it on Friday, but Monday, Tuesday, Wednesday, Thursday, we are using it. Now what we want is that your Nifty or Bank Nifty, in which you trade, now itis index specific, you can use it for stocks, but now for beginners, Nifty, Bank Nifty, Index strategy.
So you see that Nifty and Bank Nifty are in a range. It is stuck in range. Index is seen in arrange and it is not breaking the range. For example, for Nifty, today I am writing this blog, you are watching it after a year, you are watching it after 5 years, wherever you are watching it, but you understand one thing. For example, that range is 17900 and 18100example.
Nifty is stuck in the range of 200 points. Now what you see here is because big event is about to come example, a big event is coming. So before the budget, if you check it every year, you can check the data. People say a rally, which we call pre-budget rally and post-budget also happens.
That means on the day of the budget, a big move came and then a post-budget rally came again. So basically a rally is expected. Whenever there is a rally expected and a move of points can come, how can you leave it? You should not leave that.
So why are we considering this range of 200 points now? Because above 200 points, youkan get a jump of 200 points. After breaking this range, 200-300points Nifty can move more. So this is an expectation. Looking at the data of every year, we can say this. So now what we say is that this is resistance and this is support. So what is the theory of our support resistance? That the price will fall from resistance and the price will rise from support.
But you understand this thing. Budget is big thing. If there is another big event, it is a big thing that the market can move. So now you have to be alert. You have to pay a lot of attention to resistance and support. Why am I saying resistance and support specifically? Because I am talking about beginners. Now when I go in advance, I will talk about single direction. Now I am non-directional. So now this non-direction a strategy for you.
Understand this. As soon as it goes to resistance, so far we had an expectation that it will fall from resistance. But now were not assuming that it will fall. Now we are non-directional. We are thinking that a big move can come. I don’t want to leave this point. So what is my target here? I don’t want to take this small point. I want to take a big point in one direction.
So what will be my strategy here is, as soon as it goes near the resistance, I will buy both call and put here’s soon as you buy call and put, this strategy is called long straddle. What does long straddle mean? If the market moves in any direction, let me show you. You will understand by showing. I will show you. I can take time for each thing.
So it doesn’t matter to me. I care about this thing. You understand. So this is a neutral strategy. So we’ve come to long straddle. So look at this. When you are buying both call and put at the money. For example, Aim getting put at the money of 91 and the call is of 95.
It should be of almost the same price. So if you are getting it at the same price, now what you see if the market moves from here, you will have a loss until you see very carefully. When will the loss beef the market is below 18,240, you can have a loss. Number one, the market is below 17,862, if it does not fall below, you can have a loss.
It is necessary to break both these break evens, but if I say you did this trade and reached nifty, not much, do not talk too much, 18,300 from here because a big move is expected. So 18,300will be around here’s to make this strategy, if we are trading in one lot,
Then i am only getting around9400 rupees and if the market moves, then I make almost 50%. Look at this, even on the day of expiry, if it moves in a day, it is written that it is becoming around 4000 rupees more.
So you see if you get a move from here, if that move goes to 400, so you make almost the capital you put, that much money has come. This is a big move.
Now what is the logic of this? The logic of this is that the bigger the consolidation the market takes, the bigger the consolidation it is taking, the gap between the support resistance, the bigger the movies expected and the time it is taking, you think there is a spring, we are pressing the spring, we are pressing it, we have pressed it, you have pressed the spring a lot.
Now if that spring will rise, then it will jump a lot. When the market goes into a consolidation phase, then after consolidation, a move is expected. I am not saying that it will come up for you, I am saying that it can come down. So what difference does it make to me, my strategy is one-on-one directional.
So even if the market falls, even if the market falls, I am taking an example from this place, if the market comes to17800, it comes to 700, I will still be in profit. I will still be in profit, but I should have a big move expected, but what did I tell you about this strategy? You have to use this strategy when a big events coming, like I told you that at this time, there is a budgeting front of you. Now you are reading this blog later, so any big event is coming, then you will not get the benefit.
The second benefit I told you earlier, the IV will also increase, so without doing anything, your profit will be more. India VIX is on its downside according to me. It has to increase before the event, there is an expectation, so if the volatility increases, the premium will shoot up anyway and you will get the benefit of direction.
Now you say that is there any stop loss in this strategy? The answer is yes, so when we straddle, we leave the premium on one side. If the market goes towards call, then I keep sitting without, that I have taken put, I have taken put, I will let it be zero, but you do not do this. As soon as you see,
suppose you had an example that you bought this for 100 rupees, I am giving you an example, I bought a call for 100 rupees, I bought to put for 100 rupees, as soon as you see that put is 40% left, 40% means 40 rupees,60% decay, 50% decay, so50 to 60% decay,
I will talk about decay, as soon as you see half, you bought for 100rupees, you are seeing 50, so definitely you will get the benefit on the other side, when will this be less, it will be less when the other side moves,
so there will be a profit on the call side and loss on the put side, so you have seen 50to 60% decay, as soon as you saw, 50% plus, means stop at 50% because it is what happens from there, sometimes what happens in the market, you see a breakout, but it comes down from the breakout.
Breakout does a very good job, but if you talk about the index, then sometimes we see that there are false breakouts in the index, but when I said that there is a budget or there Isa big event, then you expect a big move on a big event, thesis an expectation that big move will come, still we are taking a loss of 50%, I have loss of 50% plus,
I have to cut the position of the put side and I will hold thecal position, now what do know from this, I know that the market has become trending from here. The market has made a trend, that is why my call option has increased. Trend.
So if you are giving50-60% here, not to worry because here all the recovery welcome. This loss will also recover and you will see more profit there. So this is our strategy number one.