i read in some site people have said to buy adaniport 200Pe at 1.60 and stoploss of 0.75 July 2016 expiry and the target is 3-4 rs.
I want to know on what base this analysis is done or stratergy used.
Can any one explain me in detail plz?
These are speculative bets during expiry time. SL to protect against Bigger loss.
never follow these sites and their recommendations , most of time they are of low quality research and some selfish motives behind these recommendations … in these market u will have to learn and do your own research to grow your capital steadily or else u will not be able to succeed in the markets in the long run .
Can you please elaborate in detail please
during expiry time, the ATM options have high gamma, i.e., even small movement in underlying can significantly increase the price of options. This is the case for ATM options. but, OTM options have low gamma during expiry time. so, very large movement in underlying is needed to effect a big change in OTM Option prices. so, probably, in above case, the speculators are betting either on a large movement in underlying for OTM options or, decent favorable move in case of ATM options. The reason for such trades being speculative is, time to expiry is so near. So, there is almost very less chance of underlying reverting back, once it moves against our option position. But gains can be high in case of favorable move. Probably they are seeing lot of volume in the stock, or lot of action in FNO contracts.