Margin and trading exposure applicable from 1st September 2020.

The changes bought out by the above circulars have been summarized below for your ready reference:

1. Upfront margin is required to be deposited with the broker before entering into any new trade or taking any new position.
2. MTM requirements are required to be fulfilled by T+1 day in case of Derivatives Segment and by T+2 day in case of Equity Segment.

In view of the above, from 1st september 2020 onwards no trading exposure shall be allowed on the following unsettled values since the same cannot be  considered towards upfront margin.

1. Intraday Profits
2. MTM arising from C/F to B/F futures position.
3. Net Options premiums sold.
(except against Options Buy)
4. No BTST Trades 

Amidst the above restrictions, clients shall however be able to use the sell credit of the demat holding stock so sold towards any new position from T day itself.

The M-to-M losses can be deposited by you on up to T+1 day for derivatives or T+2 day for Equity, within the timings as specified by Upstox from time-to-time. Shortfall, if any, shall be liable to penalties at the rates so prescribed by the exchange from time to time.

The changes are explained below in detail -

1. Intraday Profits (all products):

Profits from Intraday trade will only be available after settlement from exchange.

For example - Suppose you bought 100 Shares of X Ltd. for Rs. 1,00,000 on 01/09/2020 and sold the same for Rs. 1,12,000 on the same day leading to intraday profit of Rs. 12,000. In this case if you wish to buy any new shares, you shall be able to purchase the new shares only to the tune of Rs. 1,00,000. (This is because the intraday profits earned to the tune of Rs. 12,000 falls under unsettled funds)

The above example shall also be valid for intraday profits earned in the derivative segment.

2. MTM arising from C/F to B/F Futures Position

For trades related to C/F to B/F Futures, profits made by selling the position will be available after settlement by exchange.

For example - Suppose you had bought a Futures contract on 01/09/2020 for a margin of Rs. 1,00,000. On 03/09/2020 the MTM profit is Rs 10,000 post square off. You would not be able to use this MTM profit of Rs. 10,000 on 03/09/2020 to purchase any new position and margin of Rs 1,00,000 will be available for any fresh positions.

3. Net Options Premium Sold....https://upstox.com/announcements/

NIFTY options open interest chart

- limited upside seen

- highest OI is seen at 12000 CE

- highest addition is seen at 11600 CE

- unwinding seen in 11500 and 11600 PE

NIFTY intraday charts

5 min:

NIFTY + BANKNIFTY monthly charts

- this weekend I posted the monthly chart for nifty

- I wrongly assumed the month was over

- and I said what difference would a day make

- how wrong was I

- as nifty fell 400 points intraday

- here is the monthly chart

- this just shows selling at higher levels

- fall of March has taken 4 months for retracement

- no other conclusion

BANKNIFTY charts:

- index unable to sustain above 24000

NIFTY EOD charts

- trend is up on daily charts

- today nifty was up 1% initially but finally closed 2.3% in negative at 11387

- intraday fall was 400 points

- resulting bar is now a HUGE bearish engulfing bar

- so we have a very clear top in place around 11800

- and 12000 remains a strong resistance

- AD was 1:5

- VIX shot up 27% to 23.3

- markets were long overdue for a correction 

- and high PE ratio is just not suitable for new long term investors

- however I was surprised by the intensity of the fall

- some people say it was due to SEBI margin rules

- but this was in public domain for a long time and is not anything new

- swing low support around 11000

- till this breaks nothing to worry

- but PE ratio is this level will still be uncomfortably high

Short term pleasures can lead to long term traps

This is how the professionals get trapped into SISI - Single Income, Single Identity A "mouse" was put at the top of a jar filled with grains He was too happy to find so much of food around him Now he doesn't need to run around searching for food and can happily lead his life. pic.twitter.com/O814gCMXT8

— Price Action Trader (@PAVLeader) August 30, 2020

either if he has to live, he has to feed on whatever has been put into the jar Here are my top 4 lessons from this: 1) Short term pleasures can lead to long-term traps 2) If things are coming easy and you are getting comfortable, you are getting trapped into survival mode

— Price Action Trader (@PAVLeader) August 30, 2020

3) When you are not using your potential, you are losing it

4) If you don't take right action at right time, you will finish what you have and will be in no position to come out.#FoodForThought#ThinkBig#WorkOnYourPlanB#BeFutureReady#GetOutOfYourComfortZone

— Price Action Trader (@PAVLeader) August 30, 2020

NIFTY weekly + monthly charts

- trend is up

- swing low 11000

- big resistance 12000

- entire fall  of March is fully retraced

Weekly charts:

Monthly charts:

BANKNIFTY charts

 - trend is up

- nice breakout this week

- on hourly charts, breakout happened on 24-AUG

- this was also the day when BNF futures had open = low

- next resistance 26500

Transaction charges in options vs futures

- futures trading is very expensive thanks to high charges

- in this example, I considered a nifty trade in futures and options

- brokerage is Rs.40 (buying and selling)

- excl brokerage, charges for futures is Rs.150 vs Rs 27 in options

- options trading is super cheap

- note I am ignoring time decay risks here

- source - zerodha calculator

Why invest and forget is bad for the economy

Your broker makes no money.

The Govt makes no money.

Your tax accountant makes no money.

Your financial advisor makes no money.

This type of investing is harmful for the economy but good for you. https://t.co/DfjeKcQyw0

— Mr. Free | Earn while you Sleep (@LifeSkillGrowth) August 28, 2020

NIFTY intraday charts

5 min:

15 min:

BANKNIFTY breakout

- index underperformed the nifty

- now it is playing catch up

- up 4% today

- here is the 30 min chart (fut)

- the breakout started on 24th...

And here is the EOD chart for perspective

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 0.8% in positive at 11655

- AD was negative at 7:11

- VIX down 3% at 18

- NIFTY PE ratio at 33

NIFTY intraday charts

5 min:

- rangebound trading day

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed flat at 11560

- AD was flat

- support 11000

- next resistance 12000

NIFTY intraday charts

5 min:

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.7% in positive at 11550

- AD was 5:4

- past few days, breadth is positive but not very strong

NIFTY intraday charts

 

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed flat at 11472

- AD was flat

NIFTY intraday charts

 5 min:

- open = low

BANKNIFTY up 2.4% today....

- today Open=Low

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 0.8% in positive at 11466

- AD was 5:4 (positive but not good)

- VIX down 4%

NIFTY future profits when Open = High or Open = Low

I did a study of nifty futures data and analysed what happens if one takes a trade whenever nifty future  open equals the low or high.

Idea is to take a trade within 5 minutes and close at end of the day.

Data analysed is from 2-AUG-2018 to date and has 501 trading days.

There were total 32 trading days where nifty future had open=high or open=low. 

Total points gained were a stupendous 2400 points. 

Of course, all this is in the past and profits in future will obviously not be the same.

But as a strategy it makes sense to trade these days blindly with an SL...risk reward is likely to be awesome.

In fact, one can do this analysis for all FnO stocks and get even more opportunities.

Happy Ganesh Chaturthi

 

NIFTY intraday charts

 5 min:

- extremely rangebound market

- past few days, markets unable to sustain outside the range

- all breakouts (up and down) are failing

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.5% in positive at 11372

- AD was 2:1

- today was an extremely rangebound day 

- price action was similar to what happened in prev 2-3 days (see intraday charts)

NIFTY intraday charts

5 min:

- extremely rangebound day

- we had a gap down and follow thru selling

- intraday breakout above AND below initial trading range failed

- effective trading range was 40-50 points

- similar like prev day...nothing to do

15 min:

- today nifty is at same level as it was 10 days ago

NIFTY EOD charts

- trend is up on daily charts
- today nifty closed 0.8% in negative at 11312
- AD was 5:4

- swing low 10900

BANKNIFTY charts

 - BNF is underpeforming the nifty

- struggling to cross 22400 F

NIFTY intraday charts

5 min:

- narrow day

NIFTY EOD charts

- trend is up on daily charts

- today markets closed 0.2% in negative at 11402

- AD was 2:1

- trading range was very small ~ 50 points

- option writing support 11300 res 11500

History of stock market crashes

 Source: WA forward

NIFTY options open interest

- highest OI at 11300 PE

- next highest OI is at 11400 CE

- tussle between bulls and bears likely to continue

NIFTY intraday charts

5 min:

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 1.4% in positive at 11385

- AD was 5:2

- swing low/ support 10900

- NIFTY PE ratio is now 32... is it different this time?

Stocks at 52 week high

 BAJAJELEC

NIFTY options open interest analysis

 - there has been an increase in OI of OTM puts

- fall in OI of calls seen

- highest OI is now at 11000 PE

- in calls, highest OI is at 11500 CE

- overall bias is mildly bullish

BANKNIFTY support and resistance levels

 5 min charts:

NIFTY support and resistance levels

- today nifty traded in a very small range

- trading range was well within the body of Friday's red bar

- key support and resistance levels are as shown in the 15 min chart

- note there has been very heavy supply around 11400 levels

- this is also reflected in option writing levels

- support is developing around 11000

- option writers are bullish this will not break this month

NIFTY EOD charts

 - trend is up on daily charts

- today nifty closed 0.7% in positive at 11259

- AD was 2:1

- inside bar formed

- trading range was very small

NIFTY options open interest distribution

- limited upside seen

- highest OI at 11300 strike in calls and 11000 strike in puts

- 11000 is expected to provide support this month....let us see

NIFTY weekly charts

 - trend is up

- flat movement for almost a month

- consolidation?

- PE ratio at 31

- crucial support 11000

BANKNIFTY charts

- index is clearly a non performer

- trading sideways for quite some time

- index is flat for more than 3 months

- support 20900

Thread on antifragility, convexity, fat tails and payoffs

NIFTY intraday charts

 5 min:

- finally a nice trending day after many days

- was short on break of 11300

- holding deep OTM puts (positional)

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed 1% in negative at 11178

- AD was almost 1:2 

- VIX up 6%

- today was the biggest one day after 7 trading days

- in fact on 21-JUL, nifty was at 11162

- so net gain to date is not even 20 points

- swing low support 10900

Brokers with most clients

 

NIFTY intraday charts

 5 min charts

- today was expiry day

- option writing suggested support at 11300 and resistance at 11400

- break of initial trading range did not attract much selling

- market was rangebound rest of the day

NIFTY EOD charts

- trend is up on daily charts

- today nifty closed flat at 11300

- AD was 10:7

- narrow trading range

- trading bars are so small that one has to struggle to see on EOD charts

- this volatility compression will eventually lead to a big expansion

How to trade cash stocks intraday

 

4. Decide the quantity and stop loss. Assuming a capital of say 100,000 and risk of 1%, the stop in points works out to be 10 points and a quantity of 100 shares. 5. Don't use too much leverage as it can kill you. 6. Use a method to generate buy sell signals. Contd...

— Linus Trading (@LinusTrading) August 12, 2020

NIFTY intraday charts

5 min

- valid buy signal