Nov 2019 ; With 10 out of 11 wins, Our 12th article with live trade & analysis for 2% Monthly opportunity
Hindustan Unilever Limited (HUL)
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company with a heritage of over 80 years in India and a whopping market capitalization of Rs 4.4 Lac crores.
HUL is trading at Rs 2034 per share (19 Nov 2019, 2:30 pm).
Our Research has presented us with a high conviction probability that, HUL will not close below 1980 this month. The probability for this event not occurring is 95% probability.
That means HUL which is trading at 2034 , as on 19 Nov 2019, 2:30 pm , is not going to close below 1980 per share.
If 1980 per share is traded in exchange before Nov end, this would mean a 8.7% down move in HUL from its open price of Rs 2170 ( w.r.t 1st Nov 2019).
What to do for that 2 % (rs 2000 for 1 lac )?
- Investment Required (Margin) : Rs 1,00,000 /-
- Sell HUL 1 lot Nov 1980 strike PE (Put option) at Rs 8 price
- Lot size : 300
- Potential to earn the premium is 300 x 8 = Rs. 2400 /- , or 2.4 % upon your Rs 1 lakh
Scenario ; it's Good & We are correct.
- At end of the month expiry, if price remains above Rs 1980.
- Premium earned is : Rs 8 x 300 = Rs 2400 profit
- Profit in % : 2.4 % on 100,000 invested
Scenario; it's Bad & We are wrong
- At end of the month expiry, if price trades below Rs 1980 i.e. say 1960.
- Premium paid is : Rs (8 - 20) points X 300 lot size = Rs 3600 loss
- Loss in % : 3.6% on 100,000
- At this stage of loss, you need to consult us about how we will manage the risk. Whatsapp 8828147028
Philosophy behind this trade
A ) Monthly Data
We analysed past 70 months, since Jan 2014.
Monthly data reflects a pattern . On a monthly candle, since 2014, HUL has closed its month below by 8.7% or more, only 1 out of 70 months. While it made low more than 8.7%, thrice in 70 months
Favorable probability for this trade’s success is 95.8% . i.e. our winning chances.
That leaves us to 5% probability of event repeating itself for ( 3/70= 4.2% ) This is your risk.
In other words one could say, there is 95.8 % probability, HUL won’t crash 8.7% from its open of Rs 2170 per share, this month.
With all these key information at hand, we propose to act akin to an insurance company by earning premiums against an event (strike price) which is not likely to trigger, before Nov 28.
Strike of 1980 is the event for us.
Sell the put option. Let the premiums decay.
Our previous attempts :-
https://www.dhirubhai.net/pulse/oct-2019-9-out-10-wins-our-11th-article-live-trade-analysis-s-s/
https://comexsignals.quora.com/M...
TCS result based trade opportunity ~ A monthly 2% earning analysis article series
March 2019 2 % return , An article series of live analysis n performance for 2% Monthly
2% return for December . Must try
This is a capital growth strategy with simple probability, pattern recognition , and standard deviation analysis.
For risk management, contact us on whatsapp for clarifications.
We can adapt different risk mitigation depending upon day and price.
Let us wait for November end. That is when we will update the result here. Till then whatsapp for clarifications.
Disclaimer :
- Being an article, it's a demonstration of our style.
- It's in no way a recommendation or suggestion for trade.
- You do it at your own due diligence.
- Past performance is not a guarantee for future performance.