Today is the Union Budget Day 2018. Jaitley Ji has presented us with the budget and as usual, the market has reacted with wide swings during and after the budget. I know many traders have lost money today because they take the market too lightly. Trading in volatile markets like the budget day is an art, and you need to master it. I am watching budget day trading since 2009 very closely and I have almost mastered the art of trading options in volatile markets. I will share my today’s trading journal with you in this post.
Introduction to Line Break Charts
Yesterday I alerted you to trade today’s market with line break charts because it prints less whipsaw in volatility. I have made a tweak in normal line break charts. I advise using a 6-line break chart in a 1-minute chart.
Signals for Options Trading in Today’s Volatile Market
Signals in the Nifty Index
Today, I got 3 signals in the Nifty index with line break charts and mixed and matched the trades with pivot points to decide my targets. First, let’s check the line break chart of the Nifty index.
First, we got a sell signal and immediately I opened up a buy order in Nifty 11000 put option. I have also alerted my Zero Brokerage Club subscribers to buy this put, check our telegram channel screenshot below:
For the put option targets, I used the pivot points. The first target was reached within the next 3 minutes only, 11000 PE hits 145. Even the second target was done within 30 minutes. So I booked full and asked my subscribers to book full too.
Signals in the Nifty Bank Index
Next, I changed to NSEBANK charts. I got a buy signal as per my setup in Bank Nifty on 1st February 27300 CE. I preferred weekly CE and PE options because they have expiry today and I love to trade the expiry day options. My subscribers also went long on the Bank Nifty call option.
Both of my targets have been achieved within the next 32 minutes and I and my subscribers booked full profits. Check the telegram channel screenshot.
Profit Potential of Options Trading in Volatile Markets
So, how much profit I made by trading options in volatile markets? If we traded 2 lots in each trade and booked 1 lot each in each target in Nifty options my total profits were Rs. 4500 (average 30 points x total traded quantity 150), whereas the total margin needed was Rs. 12600 for this trade. And in Bank Nifty options my total profits were Rs. 12000 (average 150 points x total traded quantity 80), whereas the total margin needed was Rs. 5600 for this trade. So my total profits were Rs. 16500 against a margin of 18200, i.e. more than 90% return on investment or 90% returns on the margin money.
In conclusion, options trading especially in a volatile market can be very rewarding as options prices move fast at that time. However, you need to keep in mind, the same can have a high-risk potential too. Hence you need to be properly informed before jumping into trading in a volatile market. If you are losing money on the stock markets, if you know nothing about trading options in volatile markets, you can join my telegram channel. For this, you need to have a Zerodha account with me.
Excellent post Sir,very informative & educative.Thanks.For Banknifty what can be the setting?Will this work in a sideways /non volatile markets?
Avinash, same setting for both Nifty and Bank Nifty. I use a 1-minute, 6 line break chart.
Sir,i have already got a Zerodha account. how can i join ur group.
Raja, you can always open another account in any friends/relatives name. To join me and open an account CLICK HERE.