Traders make money come rain or shine
It is a hallowed EOD tradition on Dalal Street for traders to show off their MTM screenshots.
The veterans show their earnings, much to the excitement of the newbies.
The newbies show theirs and receive valuable guidance from the veterans on what they can do to improve the earnings.
The best part is that the earnings gush in irrespective of whether the Indices are in the green or in the red.
Yesterday, a trader stunned everyone by reporting a mammoth earning of Rs. 87 lakh.
One more record but this time on positive side.
87L
Twitter experts you can discuss my risk management as discussed last time during loss. ?? pic.twitter.com/bTpPXLy2vD— Mitesh Patel (@Mitesh_Engr) March 9, 2020
A careful study of the screenshot reveals that a bulk of the gains came from selling the futures of RBL Bank.
The junkyard stock plunged a mammoth 23%, creating despair amongst investors and joy amongst short-sellers.
Another trader claimed to have raked in a fortune of Rs. 27 lakh from “intraday option buying” of Puts.
This works out to an eye-popping ROI of 136%.
The trader offered to show his contract notes to Doubting Thomases.
Profits Rs.27,29,851
Capital 20lakhs
ROI 136%
Time: INTRADAY from Option BUYING.
Can give contract notes to make frame.When @coronavirus making no twitter heros to post their mtm profits or even have students for training, we have so much.
Don't ask others to post plz.
??? pic.twitter.com/ROfZRIU2qw— CA.Rudramurthy BV (@iamrudramurthy) March 5, 2020
However, the crash does appear to have taken its toll because several other traders who are famous for their mega earnings’ screenshots are conspicuous by their absence.
Buy 50 cent calls, take home $200 million
A trader on Wall Street has discovered a novel way to rake in the big bucks.
He buys cheap OTM calls at throwaway prices and makes a fortune when the Indices plunge or surge.
The modus operandi of the trader is very simple.
“They have a very particular pattern of buying options. They come in every day and buy 50,000 VIX calls worth 50 cents. They don’t care too much what the strike is; they just pick the option that’s worth 50 cents,” it was reported.
“The persistence and the fixation on actual costs suggests that someone sat down at the beginning of the year and said, ‘OK, we’re going to spend this much on hedging our books every day. Go out and do it, and I don’t care what you do — just spend this much money,’” it was added.
The gambit has paid off big time because the trader effortlessly pocketed a fortune of $200 Million from the OTM calls when the volatility spiked.
Even in the present meltdown, the trader is at the forefront, aggressively mopping up all the cheap OTM calls and puts.
The "50 Cent" $VIX options trading continues as a trader buys 50,000 Mar 23 $VIX calls for 47 cents. Plus, the S&P 500 Index sells-off midday on reports of new coronavirus cases. Host Michael Palmer pic.twitter.com/p6Tt5nJxde
— Cboe (@CBOE) February 20, 2020
No boubt, he would have raked in a massive fortune this time as well.
If the Index triggers off the Lower Circuit switch, it implies the market has bottomed out
According to some experts, if the Index hits the Lower Circuit barrier, it means that the market has reached the point of maximum despair and capitulation.
Things can only get better after this, not worse.
Yesterday, at 1900 hours IST, the Dow Jones plunged a nerve-wracking 2000 points and did indeed trip off the lower circuit.
BREAKING: Trading halted for 15 minutes as the S&P 500 falls 7%. https://t.co/kOyx3C3nf5 pic.twitter.com/mv9q9YaMTz
— CNBC (@CNBC) March 9, 2020
US HITS LOWER CIRCUIT!
Dow Jones, Nasdaq and S&P 500 down 7%. Trading halted. #StockMarketCrash2020 pic.twitter.com/YaUmRs0uJ6— Mangalam Maloo (@blitzkreigm) March 9, 2020
Thankfully, thereafter calm prevailed amongst investors and the Dow Futures began its march upwards, surging an impressive 3%+.
In this #CNBCClassic clip from 1995, the Dow breaks 5,000 for the first time as traders react on the floor of the @NYSE. pic.twitter.com/tO8aKfTwFa
— CNBC (@CNBC) March 8, 2020
Meltdown is overdone: Expert who predicted crash
Zhou Wang of QQQ Capital Hedge Fund demonstrated brilliance of thinking.
“After Wuhan was closed you could feel the panic. Normally for Chinese New Year there would be people everywhere queuing for restaurants and going to the beach, but this year there was no one – everything was empty,” he said.
He sensibly loaded up on puts against the most vulnerable stocks from the airlines and hotels sector.
This paid off well and the Hedge Fund took home massive earnings of 77%.
However, Zhou Wang has now sounded the red alert that a reversal is imminent.
“China factory production has gradually resumed and that’s a good sign from a supply chain-perspective… and we think the U.S. economy is too strong,” he said, implying that all bearish bets are now off the table.
He also correctly predicted that the Central Banks around the world will ramp up liquidity and cut interest rates even further, which will throttle the Bears and fuel the Bulls.
NY Fed pumps at least $50 billion more into the financial system to ease #coronavirus stress https://t.co/1SGOEqvKze
— State of the Union (@CNNSotu) March 9, 2020
Other experts have corroborated this viewpoint.
India tends to swing from feast to famine and we are at or near capitulation. All the classic signs are in place – Consensus growth downgrades, VIX above 50, FIIs are selling. It is important to be in the game and take advantage than panic!
— Nikunj Dalmia (@nikunjdalmia) March 10, 2020
In fact, a study of the earlier corrections after mega events shows that the stock markets always bounce back into glory.
Usually, in just a year later, the Indices are significantly up.
Here are some of the largest geopolitical events to hit the US going back to Pearl Harbor in 1941.
The good news is stocks have always come back. The bad news is it can sometimes take awhile. pic.twitter.com/8W0TaUYCvT
— Ryan Detrick, CMT (@RyanDetrick) March 9, 2020
Although no one knows when this correction will end, take note looking at the 31 other corrections since 1980 shows the S&P 500 is higher a year later 90% of the time.
Futures and quite scary right now, but this helps provide some important context. pic.twitter.com/ym6jdHGxBk
— Ryan Detrick, CMT (@RyanDetrick) March 9, 2020
All of this implies that the present crash is a golden buying opportunity that we should not miss!
