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 5,400-5,650 levels, and the sustenance of 5,470 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 5,400 levels should guide the Nifty towards 5,200 levels.
NIFTY:
Sell Nifty May futures @ 5580-5600* stop loss: 5,650* target: 5,470, 5450* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty May 5600 call @ 70-72 & sell one Nifty May 5400 put @ 40-42; Upper Break-even point: 5710; Lower break-even point: 5290; Max profit: Rs 5,500 in the range of 5400-5600 levels; TF: 10-12 days
Symbol Recomm Entry Stop Loss Target Time Frame
May5700C Short 42-45 5650(Spot) 25-26 1 Week
May5400P Short 40-45 5470(Spot) 25-26 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bear-put spread in Hindalco
Hindalco has been trading on a bearish note over the last few trading sessions. The stock saw accumulation of short positions. On the options front, May-series OTM put options witnessed buying, while OTM call options saw writing, indicating that it is likely to trade on a negative note over the next few trading sessions. On the downside, the stock is expected to touch 190 levels. On the upside, it is expected to find resistance at 205 levels. In such a scenario, we advise a bear-put spread on the stock for the current series.
Buy one May 200 put @ 6-6.50 and sell one May 190 put @ 3-3.5; breakeven point: 196.5; max profit: Rs 6,500 if the stock expires below 190 levels; max loss: Rs 3,500 if the stock expires above 200 levels.
Bear-put spread in Bharti Airtel
Bharti’s Q4 results missed street expectations. As a result, the stock was beaten down. The counter witnessed accumulation of fresh short positions. The OTM put options saw buying, indicating that the stock is likely to continue to trade on a negative note this week. In such a scenario, we suggest a bear-put spread on the stock for the current series.
Buy one May 340 put @ 5-5.75 and sell one May 320 put @ 1.25-1.5; breakeven point: 335.5; max profit: Rs 15,500 below 320 levels; max loss: Rs 4,500 above 340 levels
Pair strategy in Indian Hotels and Hotel Leela
Indian Hotels and Hotel Leela saw correlated movement in the past, with rolling price correlation of 78% in the six-month data-set. Hotel Leela has outperformed Indian Hotels in the recent past. The current price ratio of Indian Hotels and Hotel Leela is 0.33. The ratio is currently trading around its lows and appears stretched; we believe it is likely to revert to its mean levels. The mean price ratio is 0.37 and the current price ratio is more than 98 percentile away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy one lot of Indian Hotels May futures @ 79-80 and sell one lot of Hotel Leela May futures @ 40.5-41; current priceratio: 0.33; target: 0.37 and 0.38; SL: 0.31.
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.
