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Hi Traders here is an idea to make money in this Indian Election Period for Indian Traders. As we all know Central Elections having extreme Impact on our Markets because market always expects good and stable Government.
Here we are checking what happened in the past elections and their impact on markets as well what will happen this time and its impact on market and how to make huge profit by applying simple Option Strategies.
Let’s Check:
Election Volatility Effect
March (Second last month before Election Result)
March 2004: Nifty -12%
Rs. 12 Put becomes Rs. 124
Return: 1000%
March 2009: Nifty +10%
Rs. 20 Call becomes Rs. 94
Return: 500%
March 2014: Nifty +6%
Rs. 14 Call becomes Rs. 148
Return: 1000%
April Expiry (Last month before Election Result)
April 2004: Nifty +8% for first 15 days
Rs. 22 Call becomes Rs. 100
Return: 500%
Last 4 Days to expiry Nifty -4%
Rs. 6 Put becomes Rs. 56
Return: 900%
Net Return: 1400%
April 2009: Nifty +13%
Rs. 15 Call becomes Rs. 118
Return: 800%
April 2014: Nifty +2% Stable
No Volatility.
Election Result Day Straddle Profit
As we didn’t know what will happen on Election Result day whether NDA or UPA or Trishanku Loksabha will be there.
So we make Straddle here just before election result day at market closing time 3.15 pm
Straddle Effect:
May 2004:
Market Close @ 1700
1700 Call Rs. 43
1700 Put Rs. 44
Net Investment: Rs. 85
As result comes it shows that there is Trishanku Loksabha and no any party got pure majority.
So on election result day market is Down -12%
And our Rs. 43 Call become Rs. 15
Rs. 44 Put become Rs. 150
So we got net profit 150 +15 = 165
As our net investment on straddle is Rs.85 and we got Rs. 165
So its 100% return in one day.
If we didn’t sell that straddle on same day and keep it so after Sat. and Sunday holidays when market opens on Monday it got Lower Circuit -20% Down.
On that day our Rs. 44 Put become Rs. 350
So we got total Rs. 350 on straddle investment of Rs. 85
Profit 400% by Straddle in 2004 Election.
May 2009:
Market Close @ 3671
3700 Call Rs. 145
3700 Put Rs. 160
Net Investment: Rs. 305
As result comes it shows that clear Majority to UPA.
So after Sat. and Sunday holidays when markets opens on Monday
its +20% up and got Upper Circuit.
And our Rs. 145 Call become Rs. 563
Rs. 160 Put become Rs. 17
So we got net profit 563 +17 = 580
As our net investment on straddle is Rs.305 and we got Rs. 580
So its almost 100% return in one day.
If we didn’t sell that straddle on same day and keep it for next day because of Upper Circuit lot of traders couldn’t buy.
On second day our Rs. 145 Call become Rs. 900 @ high
So we got total Rs. 900 on straddle investment of Rs. 305
Profit 300% by Straddle in 2009 Election.
As there are more chances of Modi Sarkar this time but as like 2004 and 2009 we didn’t know what will happen on Election Result day whether NDA or UPA or Trishanku Loksabha will be there.
So we make Straddle here just before election result day at market closing time 3.15 pm.
As on 2nd May 2014 Nifty is @ 6694
6700 Call Rs. 258
6700 Put Rs. 232
As there are more chances of market will be stable up to Election Result day. So premiums of Call and Put will be almost same
Though these are costly as compared to last month’s premiums but its obvious everybody wants to invest in options to get profit by this Election volatility and if you see in 2004 our straddle cost us Rs. 85 and in 2009 it cost us Rs. 305 so its 350% more costly and now as compare to 2009 it cost us just 65% more.
After making Straddle Lets check all scenarios and how to trade
1) First we have to Buy ATM Call on 12th May because that is last day of voting. On that day all the Exit Polls Results will come out as they already said about Modi Sarkar and market is also expect the same. There are more chances of market will Gap up on 13th May so we will sell our Call on that day. (Don’t buy cheap OTM Call, IV will kill it). Same happened before 4 months when BJP elected in 4 states.
2) If you see history market is up +2% in 2004 and 2009 before one day of actual election result day. So we Buy OTM Call (Rs. 20 to Rs. 30) on 15th May and sell it before market close or whenever gets good profit on same day
3) We make Straddle here just before election result day at market closing time 3.15 pm.
1) As there is market open on election result day there are chances market will Gap up on 16th may. And it will go Up and positive till end, if as expected Modi Sarkar will form govt.with Majority. We will sell our straddle at market close time if this will happen.
2) Market open positive but if there are chances of Trishanku Loksabha it will be clear at afternoon. (Same happened in 2004 and that time market also at its all time high) We sell our Call and keep Put up to end of the day because if that happens there are more chances of market will get Lower Circuit. In this case we sell our Put at market closing time.
3) If there will be Modi Sarkar which clear at afternoon but FII and Big Players already invest so much funds for expecting this. There are also chances of they sell their positions as retail investors comes in market. In this case we sell our Straddle whenever gets 50% to 100% profit.
The information above is for Educational purpose only. Options trading involves risk and may not be suitable for every trader
Thank You
IntradaySecrets.
Here we are checking what happened in the past elections and their impact on markets as well what will happen this time and its impact on market and how to make huge profit by applying simple Option Strategies.
Let’s Check:
Election Volatility Effect
March (Second last month before Election Result)
March 2004: Nifty -12%
Rs. 12 Put becomes Rs. 124
Return: 1000%
March 2009: Nifty +10%
Rs. 20 Call becomes Rs. 94
Return: 500%
March 2014: Nifty +6%
Rs. 14 Call becomes Rs. 148
Return: 1000%
April Expiry (Last month before Election Result)
April 2004: Nifty +8% for first 15 days
Rs. 22 Call becomes Rs. 100
Return: 500%
Last 4 Days to expiry Nifty -4%
Rs. 6 Put becomes Rs. 56
Return: 900%
Net Return: 1400%
April 2009: Nifty +13%
Rs. 15 Call becomes Rs. 118
Return: 800%
April 2014: Nifty +2% Stable
No Volatility.
Election Result Day Straddle Profit
As we didn’t know what will happen on Election Result day whether NDA or UPA or Trishanku Loksabha will be there.
So we make Straddle here just before election result day at market closing time 3.15 pm
Straddle Effect:
May 2004:
Market Close @ 1700
1700 Call Rs. 43
1700 Put Rs. 44
Net Investment: Rs. 85
As result comes it shows that there is Trishanku Loksabha and no any party got pure majority.
So on election result day market is Down -12%
And our Rs. 43 Call become Rs. 15
Rs. 44 Put become Rs. 150
So we got net profit 150 +15 = 165
As our net investment on straddle is Rs.85 and we got Rs. 165
So its 100% return in one day.
If we didn’t sell that straddle on same day and keep it so after Sat. and Sunday holidays when market opens on Monday it got Lower Circuit -20% Down.
On that day our Rs. 44 Put become Rs. 350
So we got total Rs. 350 on straddle investment of Rs. 85
Profit 400% by Straddle in 2004 Election.
May 2009:
Market Close @ 3671
3700 Call Rs. 145
3700 Put Rs. 160
Net Investment: Rs. 305
As result comes it shows that clear Majority to UPA.
So after Sat. and Sunday holidays when markets opens on Monday
its +20% up and got Upper Circuit.
And our Rs. 145 Call become Rs. 563
Rs. 160 Put become Rs. 17
So we got net profit 563 +17 = 580
As our net investment on straddle is Rs.305 and we got Rs. 580
So its almost 100% return in one day.
If we didn’t sell that straddle on same day and keep it for next day because of Upper Circuit lot of traders couldn’t buy.
On second day our Rs. 145 Call become Rs. 900 @ high
So we got total Rs. 900 on straddle investment of Rs. 305
Profit 300% by Straddle in 2009 Election.
How to make Profit by Straddle in this 2014 Election
As there are more chances of Modi Sarkar this time but as like 2004 and 2009 we didn’t know what will happen on Election Result day whether NDA or UPA or Trishanku Loksabha will be there.
So we make Straddle here just before election result day at market closing time 3.15 pm.
As on 2nd May 2014 Nifty is @ 6694
6700 Call Rs. 258
6700 Put Rs. 232
As there are more chances of market will be stable up to Election Result day. So premiums of Call and Put will be almost same
Though these are costly as compared to last month’s premiums but its obvious everybody wants to invest in options to get profit by this Election volatility and if you see in 2004 our straddle cost us Rs. 85 and in 2009 it cost us Rs. 305 so its 350% more costly and now as compare to 2009 it cost us just 65% more.
After making Straddle Lets check all scenarios and how to trade
1) First we have to Buy ATM Call on 12th May because that is last day of voting. On that day all the Exit Polls Results will come out as they already said about Modi Sarkar and market is also expect the same. There are more chances of market will Gap up on 13th May so we will sell our Call on that day. (Don’t buy cheap OTM Call, IV will kill it). Same happened before 4 months when BJP elected in 4 states.
2) If you see history market is up +2% in 2004 and 2009 before one day of actual election result day. So we Buy OTM Call (Rs. 20 to Rs. 30) on 15th May and sell it before market close or whenever gets good profit on same day
3) We make Straddle here just before election result day at market closing time 3.15 pm.
Election Result Day Scenarios
1) As there is market open on election result day there are chances market will Gap up on 16th may. And it will go Up and positive till end, if as expected Modi Sarkar will form govt.with Majority. We will sell our straddle at market close time if this will happen.
2) Market open positive but if there are chances of Trishanku Loksabha it will be clear at afternoon. (Same happened in 2004 and that time market also at its all time high) We sell our Call and keep Put up to end of the day because if that happens there are more chances of market will get Lower Circuit. In this case we sell our Put at market closing time.
3) If there will be Modi Sarkar which clear at afternoon but FII and Big Players already invest so much funds for expecting this. There are also chances of they sell their positions as retail investors comes in market. In this case we sell our Straddle whenever gets 50% to 100% profit.
The information above is for Educational purpose only. Options trading involves risk and may not be suitable for every trader
Thank You
IntradaySecrets.