'Don't touch call, put options for next 20-25 days': Basant Maheshwari warns traders to step away from F&O till June 4

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Also Read: FPIs turn aggressive sellers on market crash; offload ₹17,083 crore in Indian equities: When will buying resume? Maheshwari, who runs a SEBI-registered portfolio management company Basant Maheshwari Wealth Advisers LLP, said that the Indian market will not react the way we want it to ahead of election results. ‘’So, rather than taking long or short positions amid extreme volatility, it is better to stay away from derivates till the market regains stability,'' said the analyst. He added that market trajectory will only be clear after election outcome or maybe on June 3 when exit polls will be announced.

Till then, he warns traders of refraining from taking positions which they may ‘regret sooner or later’. Elaborating on the market volatility, Maheshwari said that when the India VIX index reached 10, it indicates that the market is always ‘prone to accidents’. ‘’When the India VIX index touches 10, it means it will be prone to accidents.

So, traders should be ready for such accidents as soon as VIX rises and should not jump ‘up’ or ‘down’ with their stock or option positions,'' said Maheshwari. The market's fear gauge — ‘India VIX’— indicates how much the Nifty 50 index is expected to change in the next 30 days. A major drop in the volatility index indicates that participants are confident about the near-term market trajectory.

The volatility index typically experiences a decline once the election outcome is determined. The India VIX spiking 72 per cent from the April lows indicates that high volatility will persist for some more time. VIX is based on Nifty index options prices.