What can you do if you are stuck in RPL?
A reader wrote:
“plz tell me something about rpl.. i dont how i got trap in this but now it is true that i m totally trapped here.
i m holding rpl nov fut @294 and then again i took one more at @267… now plz tell some thing about this.. and if it wil come up this month or how many months i wil have to hold.. because my capacity of paying m2m is finished..”
Earlier it was Infosys and now it is RPL.It doesn’t matter what the stock name is-the problem is the same. You buy the stock when the whole world is getting into it and then the stock reverses on you. Then you regret your decision and start to hope for recovery in stock price.
A lot of investors entered RPL between 270-290 levels because they did not want to “miss the bus”. Then they compounded their problems by “averaging their losers” rather than cutting them. Now many such investors are facing margin calls and are still reluctant to sell the stock.
So what can you do if you are facing with such a situation?
I can tell you how I am trying to help one of my clients who got stuck in the stock at 280 levels (despite my repeated warnings he gave in to his greed).
First thing we are did was to sell the stock at around 230 levels and book our losses (around 20%). Now it was very hard to convince the guy to sell the stock at such a loss. No one is willing to experience the pain. How I look at this is- I am paying the tuition fee to the markets for learning. Here it was my mistake to get greedy and I ought to pay for my greed.
Secondly as a trader there are always plenty of good opportunities available. If you don’t get out of your losing position you cannot take advanatge of many potential winners which are going to come your way.
So taking the above approach we put our money into Nagarjuna Fertlizer,JP Hydro,Indiabulls and Reliance Capital. And as expected we have been able to recover 70-80% of our losses within a week. And if the markets remain good for another couple of sessions we might even end up making much more money than we lost in RPL!
Coming to RPL-we might have taken a loss on this one but I’d consider it as a temporary loss. As and when stock regains its momentum we will be there with cash to attack the stock and get back our money. But if I continue to hold the stock-hoping for a recovery I might be missing out on many good opportunities. And I don’t know when the stock shall recover.It needs to cross the 230-260 zone to get back to higher levels.
So the solution is simple- Use the rise in the stock to get out and put your money somewhere else. “Hope” is the biggest enemy of every trader. As they say “trading teaches you to view the world as it “is” and not how it “should” be.
Thats why my clients prefer to pay me a little to “learn and earn” rather than pay heavily to the markets!
Again today, huge trading in the 300 call.
I checked the lower levels but hardly 20K or 40K shares i.e. say 6-10 trades but in the 300 call there is 415000 volume i.e. almost 120 trades or more ….
Midcaps are already moving and zooming …
Keep your ears open everyone …..
Murtaza
Murtaza- Even we are also hopeful of making money again in RPL. Right not its a plain wait and watch!
Ok. Here’s another piece of news which I got from a group and its pretty much confirmed.
There has been an abnormal activity in the RPL 300 Call option.
Wait, watch and book profits in the shares we/you have (no new inv) should be the word i supoose coz the mkt wud again retest the earlier highs. If it breaks out, then we can reenter ….
Do check it out…
Murtaza
Raghu- It might not be good to blame others for your losses!
We alone our responsible for our trades.
Have you ever attributed your profits to “operators”? I see this tendency to take the credit for your wins but blaming the market for your losses!
Of course if someone used some “insider info” then SEBI should investigate! But that has nothing to do with you getting justice out of that.
Between November 1 and November 6, 2007, a particular group made short sales of 10crore shares of Reliance Petroleum in the futures segment of National Stock Exchange costing Rs.3,000 crores approximately. they made a cool Rs 1,000 crores in less than a month, because the Reliance Petroleum shares have now crashed from Rs.295 to Rs 195 per share!. These guys have made Rs.100 per share.
isnt it ironic that someone knew that RIL was going to sell a huge quantity of shares and the prices were bound to come down?
My 2nd question is Who financed these traders for their margins? Where has this profit gone? and who bore the loss???
Its innocent small investors who bought Reliance Petroleum shares at the high prices, not knowing that this unholy alliance was indulging in insider trading and making illegal profits while Mukesh Ambani’s own company RIL was selling shares without disclosing this to investors!!
I am a small investor who like an idiot was also caught in this and lost over 1 lakh of my hard earned money!
But with the papers also disclosing this scam im hopeful people like me will get some justice!
Read about this here -> http://www.financialexpress.com/news/Smart-operators-in-RPL-futures-make-a-cool-Rs-1-000-cr/244312/
and here -> http://www.livemint.com/2007/11/27211828/Reliance-Petro-scrip-under-Seb.html?atype=tp
Ashish- I am not aware of such 1:15 ratio on RPL/RIL. This might be one of the ways to “explain” the moves on RPL. All we know is that RIL offloaded some of its equity at 223/share to raise some cash.
We might do better if we care more about our “own reasons” for entering or exiting the stock rather than looking for the “reasons” provided by the rumour mill or media.
This is WAT I READ IN ANOTHER SITE::::>
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Reliance Energy has 508 shares of Reliance Power.
Reliance Energy has 22.85 crore shares outstanding.
Thus ownership of 1 Reliance Energy stock brings with it ownership of around 22.2 shares of Reliance Power.
If Reliance Power fixes its IPO price at Rs 80, then
1 share of Reliance Energy = 22.2 shares of Reliance Power = Rs 1776 of stack in Reliance Power.
This is a excellent arbitrage opportunity.
I would rather buy Rs 1 lac worth of shares of Reliance Energy than apply for 1 lac worth of Reliance Power shares.
Once the pricing of the IPO is certain, one should buy Reliance Energy shares.
When can the price be considered certain?
An investor can be 100% certain that the price will be at the upper end of the price band as soon as the IPO is fully subscribed.
If the IPO doesn’t get fully subscribed, the price may be lower and the calculations will have to be redone.
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RareBULL, x RIL will BE GIVEN TO ALL INVESTORS HOLDING 15x RPL????>> ReaLLY? WHEN WAS THIS ANNOUCEdd?
SAGEE:: I ALSO READ that 22 Reliance POWER for EVERY 1 REL will BE GIVEN …… is THAT RITE
ALL THESE EQUATIONS TRUE OR WHATT?>>>>> kuch SAMAJh nahin aaTA KABHI KABHI
Suckers are born every minute! The entire RPL rally was used by RIL to make money. It was started by some operator not linked to RIL and the stock zoomed. Now, RIL had to act to ensure that RPL stock does not rise beyond 1/15th of RIL and so RIL started selling the shares
Why 1/15th – Once RPL commences operations, then 1 RIL share will be given for every 15 RPL shares. This was built into the projections when RPL IPO was done. So, if six months average price of RPL exceeds 1/15th six months average price of RIL, then RIL will sell the shares. Please note Chevron is sitting on a PUT option of RPL. This will get exhausted minute RIL takes over RPL. So Ambani’s always win – Sheer Financial genius
I won’t go short till it breaks the 200-205 level.
IT stocks remain the best for shorting. Many people are still playing the “wait and watch” game in that sector which provides ample opportunities to act smart and profit. We have already made decent money going short on Infosys and TCS. Also made some money going short on Bharti but it has recovered quite smartly.
Hi Sge,
things looks bad on RPL, So can i go short on RPL now.
Regards
Sharesingh
Rey- Nice to see you back after a long time!
Trading is a zero sum game-for every big winner there are a lot of losers. Someone has to lose for someone else to win.
Next 2 to 3 days is all RPL suckers have to get out with a loss. Thereafter the loss will become bigger.
Winners sold out on 1st to 5th Nov.
In this market, you have Winners and Suckers – none else.
cheers
sir,
let me know if I buy federal bank tomarow may I get right issue.
Thanking you