The Quest: Energy, Security, and the Remaking of the Modern World

Oil, oil, oil….petroleum

So goes the background song in a documentary video based on Daniel Yergin’s book ‘The Prize’ on the oil industry. (http://www.youtube.com/watch?v=B1w3whd11dc)

The Prize: The Epic Quest for Oil, Money and Power

The Prize got him Pulitzer award, but that was two decades ago. After that oil industry has changed a lot, new supply sources were identified, geopolitics became one of the influential factors in oil pricing and energy security became an important consideration for governments all over the world. There was look out for alternatives but the difficulties faced there increased the importance of oil further. 

So it made Daniel to come out with a new book The Quest to document all the changes in the industry and their implications. Interesting read for those who want to know more about the black gold and the politics around it.

The Quest: Energy, Security and the Remaking of the Modern World

Market chooses its winners (and losers). Is that our choice too?

Last 6 months chart for Nifty, its winners and losers

Last 6 months chart for Bank Nifty, its winners and losers

During uncertainty of a break-out or a break-down, straddle or strangle are the tools available for options traders to put to use. That means building positions in both directions in the same stock or index.

Another way of trading this could be to identify the winners and losers and buy at the money calls and puts in those identified stocks. When a break-out is expected, buy a call of an expected winner from the trend and a put of an expected  loser.

Advantage of this method is, profits are better than in a straddle in a single stock. But one needs to verify that trend reversal possibility for those stocks are minimum.

Last 3 months Bank Nifty chart and some of its components

Bank Nifty has remained flat. ICICI and HDFC Banks remained in a narrow range. 

Money has flown out of SBI but IndusInd and Yes Bank have gained.

Nifty chart for last 3 months along with heavy weight stocks

On a 3 months chart, Nifty & Bank Nifty have gone nowhere, so are Larsen and Reliance. But the clear break-out comes from Sun Pharma and break-down at Infosys.

FII data and Nifty movement from June 10 to June 18, 2013

FII data along with Nifty Close from June 10 to June 18, 2013

Chart showing index futures influencing Nifty movement