Some view on Future & Options..........

Friends,
I have been asked some decent queries from one of my beloved friend on F&O...Co-relation between scrips in F&O & to their price variations...I am pasting his queries and my answers which I wrote to him.Hope you all will be enlightened while reading it and be of some help...

Please provide me the info below....
1) Resources (papers, website links/ anything you can) for tracking the relationships between the two, if available.

A)Well, There is no such links......if it is there I don't know...

2) Trends where action might soon come and the basis on which you arrive at such assumptions.

A)Yes, here I can throw some light.

Well,MTNL,ITC, Hindalco,LIC Housing,HP, BP, IOC,ONGC , Arvind Mills,Patni Computers,Polaris,SRF Ltd,IDBI, IFCI , HOEC,Ispat, RNRL, RPL ,Suzlon,Sterlite Ind, Aptech, TTML etc etc , the list is long...can see enormous price rise within a year....

My reasoning:

These all stocks and many others can go up in a big big way....because someone is interested in all these stocks.Viz:Aptech ,Ispat,HOEC is favourites of RJ and some others are of RKD and others are of NS , KP's etc etc....

Now where I become bullish, is when a stock gets battered in big big way without a change in the fundamentals, like say,Patni..went down from 440 to 297,Wow! and still is around 330, means it was obvious that whole lot of investors getin F&O of Patni and opeartor just tanked in such a way that it went down for 150 points....Ok, now what I see is , it didn't come back quickly to 440 level and remained there for 3-4 months means operator is tiring investors and sending message that Patni is not going to run now , so get out of the counter.....as ssosn as the counter will get dry operator will take charge of Patni counter.....but there is no way to find that...ofcourse we do use to see that such and such counter is in F&O Curb..it means that 95% position is over in long and short position and no way one can buy new lots nor can one short....at CNBC and NDTV Profit channels...they use to give such datas in morning around 9.30 am and inbetween the market hrs...from that we can take a clue...

3) Website Links to scrips which go in & out of F&O and their impacts on addition or exclusion over short-term, mid & long-term.

A) thehindubusinessline also gives such data of F&O Curbs stocks almost daily,...no other site I have seen , but I can say has never tried it...as I almost do not play in F&O...But let me tell you that no stocks can go out of F&O list at any point of time.....yes, F&O Curb is possible,means coming out of Curb and going in to Curb,but Business channel always write in a confusing way...writes that eg. "Essar Oil is now out of F&O Curb"People think Essar Oil is now not in F&O....That is rubbish...once a stock is included in F&O it never goes out from that gr...Atleast I have not seen happening ...

4) Scrips where you think some of them underperformed and where you think the negative F&O returns might trigger positive outcomes in future due to either operators or other forces.

A)I have elaborated in my first answer....

5) Any other info you think pertinent to this subject.

A)If anyone is playing in F&O he must have DEEP Pockets...this is a MUST.....because I have marked that when market tanks by 5% , individual stocks tank by 10% and more and if you have no deep pockets to give the margin you are out of that stocks and that means you have booked loss and in F& O ,Loss is loss and you can't cover it....unless you buy another lot and it goes up and sell it higher....but it is not possible....It never happens...So the best way is to have a big purse of atleast Rs.10 lacs and if you have that only one should play in F&O otherwise not, that too in a very very disciplined manner..Never buy more then 1 lots if you are going to start with Rs.10 lacs as when market tanks , one would need that money to average that lot while one lot more and also to pay the margin.....Madhu this is very very important....10 lacs and only one lot to buy.....this is the ratio....because one will need to average even one more lot to buy if it further goes down...and again pay the margin..

Moreover the average game should be done only if a stock goes down by 50-70 rs in above 200-300 rs stocks and 10-15-20 in below 200 stocks.One can't go on averging at just rs 5 down or 20 down, otherwise he will end in holding big chunk of lots...and will make a hell of the situation.....

One more thing....he should have holding capacity to roll over his position for 2-3 months or even 4-5 months even if the price do not come....and is in loss....Means 10 lacs should not be needed for 6 months atleast...I have seen the price comes back to normal level and also goes up in big way if one holds stocks in F&O be it take 2-3 months and for that ,one has to roll over it every last thrusday or before 2-3 days..lot valan ends..

Madhu these are my 2 pennys on F&O ...I may have forget some points ..and If I recall I will write more on this...

I will only say here that all I have written are my observations and no book reading.....

Regards,

Rajeev