Monday, December 11, 2006

Making Money in a Faling Stock Market!

Warning! Please Don't indulge in Deribatives trading without first understanding what Derivatives are, the difference between Options and Futures and margin trading.

And yes, you can of course make a lot of money in a falling stock market the same way you can make money in a rising stock market.

As you can see from the picture (click to enlarge please), State Bank of India went down by 5.8%, the above picture show a rise of 137% (currently it further went down to 7% and the put option premium went up by 180%).

I didn't buy the option at 37 rupees. I paid 42 ruppe for the same :-) There was an impending correction in the offing and I believed that large caps including Reliance, ICICI Bank and SBI will lead the correction. Of the above stocks, SBI had gained the most so I concluded that it might fall the most. I never expected it to fall this much in a day, but then RBI had been in my favor just this once. ( I lost during the P-Notes announcement since I was bullish), and I was bearish not because I knew that RBI would increase the cash Reserve Ratio.. I was just plain Lucky with the news though a Correction would have come anyway...

Trade in Options at your own risk!!!

Labels: , , ,

Share this Post >> / Facebook / Stumble / Reddit


Post a Comment

Links to this post:

Create a Link

<< Home