How do traders trade on RBI Monetary Policy announcement day (even day prior and after)? What precautions are taken? Is it good to stay out?

General
2

I prefer to take option Strangle or Straddle on Banknifty a day before RBI policy announcement.

3

My strategy is a bit risky. Prefer taking a stand looking at the RBI statements and if the market has discounted that.

Say i think RBI wont cut rates , and markets would fall if this happens. I will short a Nifty / Bank Nifty future and keep a SL ( for double the quantity) of around 30 points.

So if the stop loss triggers (RBi cuts rates ) i will be buying double the quantity i have shorted hence going Net Long !

4

My answer is “Wait” until policy comes out. For RBI rates announcement day, you can install ET Market App, WBP calendar, Forexcrunch App etc in your Android or watch some business TV channels and keep on waiting…Mostly fresh rates will be out at 11am. But I have seen Raghuram Rajan announced a rate cut earlier and I got sms message from ET markets at 8:57am which helped me to buy INR and Nifty. USD will bounce back in the late afternoon…

If no changes in rates are made, the market may fall a bit and come back in the same day or next. Anyhow be careful that you will see an opposite direction move for some minutes after the rates are announced. Don’t fall in to that trap.

5

How has it gone for your today? Which option strategy did you use?
Any idea what Futures and stock traders do?

6

Straddle didn’t work for today since there was no steep upside or downside move post the policy announcement. For Futures, I would recommend to take a long position and hedge it with a Option Put, and vice-versa. Naked Long or Short position may blow up your account in such situations. Hedging is always necessary.

7

Pretty good downside in Bank Nifty now… you still with the straddle or squared off?
Am not that much good with Options, focusing on futures only … so it seems I got to possibly stay out till announcements in the future.

8

I am still in Straddle, and somehow managed decent profits :slight_smile:

9

Congrats… :slight_smile:

10

So what did you do before and after today’s RBI announcement?

11

I was short at 8865 . Squared it off at 8790.

12

Congrats… :)…any particular reason u decided to square off at 8790?

13

Short term support