#investing all about PE / EPS - it just can’t get simpler than this - wonderful initiative by @KirtanShahCFP to educate one and all - keep up the great work - its worth it’s weight in gold 👏👏

---THREAD ON F&O BAN---

📛 What’s F&O Ban?
Stock goes into ban when combined Open Interest (OI) of both Future & Options contracts across series & across exchanges exceeds 95% of Market Wide Position Limit (MWPL)

Reason for stock going in ban is to curb EXCESSIVE SPECULATION

📛 What happens when stock goes into ‘FNO ban’?
-One CANNOT take Fresh positions
-But CAN square off existing position

📛 Can you trade?

Yes, you can take ‘INTRA-DAY’ position ONLY if your broker allows

But If intraday position ‘NOT CLOSED ‘

Then exchange levies PENALTY of 1% of value of increased position subject to minimum penalty of 5k & max of 1 lakh

📛 When stock is in ban can you reverse an existing position in a stock that is in FNO ban?

'YES'

Example

-If you are long on 2000 Call strike of RIL
-Can reverse with opposite position by selling 2000 Call strike

📛 When does the stock come out of ban?

-When OI falls below 80% of MWPL

Note: Exchange releases MWPL data for all F&O stocks monthly

Understanding HIGH & LOW VIX

VIX at 16: If you check today's IV behaviour, they were not spiking much even with decent delta move in BNF. The movement was subtle, giving some time to adjust. So someone having good adjustment mechanism can stay in the game longer.

1/

VIX at 20: The same delta move will be more fierce, coupled with rise in premiums. When premiums rise with movement, then the adjustment cost increases exponentially. The premiums can fall back at EOD, but the damage is done if caught in the spike.

2/

After talking to few traders, their backtest result was in favor of high VIX of 2020, rather than 2017-19. The key flaw in the backtest were the adjustments which are not easy to calculate. Combination of high theta & fixed SL during high VIX, the IV crush is cashed at EOD.

3/

Neutral option sellers who don't adjust & have fixed SL on a static straddle will not be able to benefit highly in low VIX. The straddle which moves away from ATM will increase no matter what. But if we keep on rolling our strikes, then we get good realisation of theta.

4/

I have made majority of my profits in option selling when VIX was at 13-15, mostly just relying on my adjustments. Since 2020 with high VIX, adjustments stopped working because of increase in the frequency of delta + IV spike combos & so had to shift to directional trading.

5/

Stocks below EMA( 9, 21,63 ), these stocks are avoid for us, till the time they are below EMA-63

~Bandhan Bank
~Astra Zen
~APLL
~ Amara Raja
~ Escorts
~ Hero Moto
~ Indus Tower
~ M& M Fin
~ Petronet
~ Zeel

Universe : Nifty -500

@Prakashplutus
@preetiplutus

Guys quick question

Is this pattern 🐂 or 🐻 ??? @anand_luhar

Inverse hammer then hammer pattern again on next 5 min candle

#Jubilantfoodworks