The following are Derivative calls for May Series or different time frame as indicated against each strategy given by KARVY STOCK BROKING HOUSES:
The Nifty is expected to remain in a range of 5,450-5,650 levels, and the sustenance of 5,450 levels in the near term will guide the Index towards higher resistances. However, in our view, in the current scenario, the Index is expected to see stiff resistance around 5,600-5,650 levels, while a breach of 5,450 levels should guide the Nifty towards 5,200 levels.
The Nifty is expected to remain in a range of 5,450-5,650 levels, and the sustenance of 5,450 levels in the near term will guide the Index towards higher resistances. However, in our view, in the current scenario, the Index is expected to see stiff resistance around 5,600-5,650 levels, while a breach of 5,450 levels should guide the Nifty towards 5,200 levels.
NIFTY:
Sell Nifty May futures @ 5580-5600* stop loss: 5,650* target: 5,500, 5470* (*spot levels)
Buy Nifty May futures @ 5470-5500* stop loss: 5,450* target: 5,580, 5600* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty May 5500 call @ 120-125 & sell one Nifty May 5500 put @ 40-45; Upper Break-even point: 5660; Lower break-even point: 5340; Max profit: Rs 8,000 @ 5500 levels; TF: 7-8 days
Symbol Recomm Entry Stop Loss Target Time Frame
May5700C Short 25-30 5650(Spot) 5-6 1 Week
May5400P Short 25-30 5465(Spot) 5-6 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Call ratio spread in ICICI Bank:
ICICI Bank has been range-bound over the last few trading sessions. On the futures front, the stock saw accumulation of long positions. The OTM call options witnessed closure of short positions in Friday’s trade. The May 1,100-strike put option saw closure of long positions. Overall, the stock is likely to trade on a bullish note over the next few trading sessions. In this scenario, we suggest a call ratio spread on the stock at current levels.
Buy one May 1080 call @ 23-24, sell one May 1100 call @ 15-16 and sell one May 1120 call @ 9-10; upper breakeven point: 1140; lower breakeven: 1080; max profit: Rs 5,000 if stock expires in the 1100-1120 range; max loss above 1140: unlimited; max loss below 1080: nil.
Long straddle in Suzlon:
Suzlon traded on a bullish note last week. Both May-series OTM call and put options saw buying ahead of the company’s Q4 results, indicating that the stock is likely to see a sharp move on the upside or downside in the short term. In the current scenario, we suggest a long strangle strategy on the stock.
Buy one May 52.5-strike put @ 2.50-3 and buy one May 52.5-strike put @ 1.5-2; upper breakeven: 57.5; lower breakeven: 47.5; max profit: unlimited; max loss: Rs 20,000 at 52.5 levels; timeframe: 2-3 days.
PAIR STRATEGY:
Bharat Forge and Exide Industries:
Bharat Forge and Exide Industries saw correlated movement in the past, with the rolling price correlation of 85% in the six-month data set. Exide has outperformed Bharat Forge in the recent past. The current price ratio of Bharat Forge and Exide is 2.08. The ratio is currently trading around its lows and appears stretched; we believe that it is likely to revert to its mean levels. The mean price ratio is 2.40 and the current price ratio is more than 99 percentile away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy one lot of Bharat Forge May futures @ 340-342 and sell one lot of Exide May futures @ 160-162; current price ratio: 2.08; target: 2.25 and 2.30; SL: 1.95.
NOTE: ALL ARE REQUESTED TO TRADE ON THEIR OWN DECISION/RISK AND WITH STRICT STOPLOSS. Please understand that by following stop losses, you can restrict your losses if the market goes against you. Please ensure that if you are taking any position in the F&O market, you strictly abide by the recommended stop loss. It is not advisable to get involved in complex F&O strategies if you have just started to trade in derivatives. Start with simple trades like buying and selling the Nifty and buying and selling stock futures of the 10 most liquid stocks in the F&O segment. Once you are comfortable with these basic futures transactions, you can gradually move on to buying call and put options. However, remember that writing of call and put options should only be taken up by informed investors.
