Festive time is again

Posted On Oct 30, 2019 By admin With Comments Off

Festive time is back. Generally, it is this time of the year when atmospheres lead high, as it is festival time. People are in a rapturous depression and look forward to meeting their dear ones. Shopping and feasting is at its peak. It returns one more thing, holidays.

While activity in consumer markets is high, it tapers down in stock market. With celebrations after every few daylights, the sense of ease predominates. This month there are 3 trading anniversaries. Too, during Diwali week activity is expected to slow down. With all this there are a lot of the possibility of volatility to ease off.

The beauty of financial markets is that you restrain making money on holidays as well. Like interest on you F.D. or other debt instruments go on. That’s why they say, “Let your money work for you”. In case of equities we may not feel that but sells are constantly churning information and news spurts and reflect all of it on the day it opens after a escape. So, the impact in case of equities is not linear as in case of indebtednes market instruments.

For alternatives, this is even more interesting. Such cracks have an impact almost every important Greek. The bulletin flows significance the Delta, Gamma and Vega, while the excerpt of duration significances the Theta. So, as an option trader one should clearly place himself on a particular side of the Greek.

If you think, the holidays are going to be non-events, then we are capable of simply Short options and benefit from the Time Decay. Till the possibility of a non-volatile session outweighs the chance of a volatile conference the programme determines sense with going levels of hedging. Likewise, with the fact that there is weekly options, one can take tiny and set trades which will take care of the risk management to a large extent.

However, if one feels that the Global groceries are going to be volatile( they would be on while we have holidays back home) or there are neighbourhood incidents which can make markets go volatile than its better to pick up Long alternatives strategy. In such a case, there are chances of you being on the remedy area of Delta. Too, volatility will be on your back. The only downside being if the events don’t fall out as expected the Theta impact can be very sharp. To manage this, you can use spread strategies, thus coping payment, influence of non-event and risk.

So, this gala season try to give yourself a goodie by trading it right on a holiday.

Happy Trading.

Cheers !!!