The following are Derivative calls for April Series or different time frame as indicated against each strategy given by KARVY STOCK BROKING:
The Nifty is expected to remain in a range of 5,700-5,950 levels, and a sustained move above 5,950 will guide the index towards higher resistances. However, in our view, in the current scenario, the Nifty is expected to witness stiff resistance around 5,900-5,950 levels, which will continue to see profit-taking.
NIFTY:
Buy Nifty April futures @ 5,780-5,800* Average: 5,750* stop loss: 5,700* target: 5,900, 5,950* (*spot levels)
NIFTY STRATEGY:
Sell one lot of Nifty April 5800 PE @ 68-70 and sell one lot of Nifty April 5900 CE @ 68-70; UBEP: 6040; LBEP: 5660; Max profit: Rs.7000 if Nifty expires in a range of 5800-5900; TF: 8-10 days.
NIFTY OPTIONS:
Symbol Recomm Entry Stop Loss Target Time Frame
Apr6000C Short 40-45 5950 (Spot) 20-22 1 Week
Apr5700P Short 45-50 5780 (Spot) 20-22 1 Week
HYBRID STRATEGIES:
Short Strangle in Reliance: Reliance has been trading on a bearish note last week. The stock faced stiff resistance at 1,060 levels. On the downside, it is expected to fi nd support at 1,000 levels. On the options front, the April-series OTM call and put options have witnessed writing, indicating the stock is likely to consolidate in a narrow range this week. In such a scenario, we recommend a short strangle spread on the stock for the current series.
Sell one April 1040 call @ 17-18 and sell one April 1000 put @ 10-11; upper breakeven point: 1067; lower breakeven point: 973; maximum profi t: Rs6,750 if the stock expires in the range of 1000-1040 levels.
Covered Call Spread in ICICI Bank: ICICI Bank has been rangebound over the last few trading sessions. However, the April-series OTM call options have witnessed buying, indicating the stock is likely to trade on a positive note this week. On the downside, it is expected to find immediate support at 1,090 levels. In such a scenario, we suggest a covered-call spread strategy on the stock for the current series.
Buy one lot April futures @ 1098-1100 and sell one April 1120 call @ 20-21; stop loss on downside; 1080; max profit: Rs10,000 above 1120; max loss: unlimited below 1080.
PAIR STRATEGIES:
SBI and Axis Bank: SBI and Axis Bank showed correlated movement in the past, with a rolling price correlation of 85% in the six-month data-set. Axis Bank had outperformed IFCI in the recent past. The current price ratio of SBI and Axis Bank is 0.14. 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 0.22 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 SBI April futures @ 2783-2785 and sell one lot Axis Bank April futures @ 1448-1450; current price ratio: 0.14; target: 0.18 and 0.20; SL: 0.10.
NOTE: ALL ARE REQUESTED TO TRADE ON THEIR OWN DECISION/RISK AND WITH STRICT STOPLOS.
