Where is NIFTY Headed?

Come Jan 2009 there appears an enthusiasm pervading the air. Market last friday 2nd Jan 2009 closed about 3050 NIFTY. Thats wonderful. Is not it? When compared to downside of 2500 NIFTY seeing 3050 NIFTY looks attractive.

So where is likely market heading in Jan 2009?

Pundits predict it will see 3250 in a couple of weeks. Wow if so our subdued stocks will go up?

OK Where ever it may go - that is what an unknown figure - by Jan end can it cross 3350 NIFTY? If so what is the probability?

Such a probability is what is told in terms of Delta of an option. The current delta of 3350 Nifty is about 0.20. Which means there is about 20% chance that by Jan 2009 Last Thursday it can cross 3350. But will it cross really? Well If I know that I would be the king.

Apart from that as the probability is low - delta is low there is a chance here for selling NIFTY 3350 CALL say about Rs.50 if exists we can definitely hit that by selling 3350 CALL Jan 2009!

What is the risk of this? If Market crosses 3400 (3350+50) we lose 1 rs for every one point increase. Well if Market crosses 3400 I am really happy my stocks go up.

If you have such view try selling 3350 NIFTY beyond Rs.40 and there is a great DELTA working in your favour which can help you realizing a good amount if Market does not cross 3350!

JK