Monday, May 31, 2021

Review of Intraday Trade Plan of 31st May 2021

This is a review of the trade plan that I posted here

Few points to highlight based on the trade plan

I'm still afraid of profit booking and a downward fall before we continue to edge higher.

This played out right at the open. We opened flat and went down, before we got bought up rapidly with very high bullishness until at the end. We were also dealing with a narrow CPR for the day. I started late today after the 3 red candles, so I started the day with 15350 PE instead of the original 15300 PE as planned. Also because we had a huge downside, I started with 15600 CE on the top instead of the 15650 CE as planned. At around 10.30 or so, when we crossed 15500, the 15600 CEs started to expand like crazy. So I switched to 15700 and eventually to 15750 as we started taking each resistance throughout the day. As I was climbing up, I also switched up the PEs by booking profits from all the way to 15450 towards the end. The last strangle I was operating was at 15450 PE and 15750 CE. 

The call and put premiums seem to indicate a downward bias throughout the day. We saw 2 massive red candles at close which might be the beginning of the profit bookings as well. We also have large margin requirement starting tomorrow so not sure how it might affect the prices overall. 

We gained a little over 13 points for the day today, with an ROI of about 1% on the capital deployed.

All the paper trades that I took are described below:

(Click to enlarge the picture)

If you're wondering why I'm taking paper trades instead of actual trades. I'm currently learning about the market and a few strategies. The idea is to learn to use the position sizes and the PnL more comfortably before diving in with real money. This also introduces me to the whole ecosystem so I could find my way around once the learning phase is over. 

Large PUT side OI can be found at 15400, while a large amount of CALL side OI can be found at 16000. Tomorrow being a Tuesday, my workday schedule is fully packed, and we have new margin requirements as well. Might probably sit tomorrow out and see how things go. 

Trade Plan for 31st May 2021 - Intraday

We're at our ATH right now on Nifty. Also given a huge Gap Up on Friday after the monthly expiry of May, I'm still afraid of profit booking and a downward fall before we continue to edge higher. To play is save, I feel for a short strangle (or an Iron Condor) a safe range for Monday (31st May) would be 15300 - 15650. 

Base Trade - 15300 PE - 15650 CE

I'm hoping this 350 point strangle should have a little more than 40 - 45 points in them and I'm looking to capture around 8 - 10 points of decay. 

Reasons behind 15300 support

We've a very good support (OI) built up at 15400 and 15300. Even if we breach 15400, I feel 15300 would be still defended this week. We might change our view as the week progresses. 

Reasons behind 15640 resistance

Even after a huge gap up and rapid buying by both FII and DII, we made close to 140 point jump. I don't expect the 200 point difference to be taken out intraday. 

Possible adjustments

We'll move our CE down if we start heading towards 15400. Similarly if we will move our PE up once we cross 15500. Also if we gap up again on Monday cross over 15500 and not getting sold into in the first 15 minutes, then we'll probably start directly with 15350 instead of 15300 in the base trade. 


The plan is not to loose more than 8 points on a Monday, since the decay isn't so great especially when we don't have any overnight positions.


Nifty Futures Chart

(Click to view the chart enlarged)