The following are Derivative calls for June Series one week 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 5,400-5,600 levels. The sustenance of 5,400 levels in the near term is extremely crucial for any possibility of a recovery in the markets. However, in our view, in the current scenario, the Index is expected to see stiff resistance around 5,600 levels, while sustenance below the 5,500 levels should take the Nifty down towards 5,400 levels.
NIFTY:
Buy Nifty June futures @ 5450-5470* average: 5400* stop loss: 5,390* target: 5,550, 5600* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty June 5500 call @ 75-77 & sell one Nifty June 5500 put @ 90-92; Upper Break-even point: 5665; Lower break-even point: 5335; Max profit: ` 8,250 @ 5500 levels
Symbol Recomm Entry Stop Loss Target Time Frame
June5700CE Short 40-45 5550(Spot) 20-22 1 Week
June5400PE Short 50-55 5400(Spot) 30-32 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Short straddle in DLF:
DLF has been range-bound over the last few trading sessions. Technically, the stock faces resistance at 240 levels, while it is unlikely to break 220 levels on the downside. On the options front, the June 220-strike put option saw accumulation of short positions, while the June 240-strike call also witnessed writing. Overall, the stock is likely to consolidate in a broad range in the near term. In such a scenario, we suggest a short straddle strategy in the stock at current levels.
Sell one June 230-strike call @ 8-9 and sell one June 230-strike put @ 6-7; UBEP: 244; LBEP: 216; max profit: ` 14,000 if the stock expires at 230 levels; max loss above 244 or below 216: Unlimited.
Call ratio spread in Idea:
Idea has been trading on a positive note last week. The stock saw fresh build-up of long positions last week. On the options front, the OTM call options witnessed addition of long positions, indicating that the stock is likely to trade on a positive note in the next few trading sessions. The maximum open interest is at the June 75-strike call option. In the current scenario, we recommend a call ratio spread in the stock.
Buy one June 70-strike call @ 2.8-3 and sell two June 75 calls @ 1-1.2; UBEP: 79; LBEP: 71; max profit: ` 16,000 at 75 levels; max loss: ` 4,000 below 71 and unlimited above 79.
PAIR STRATEGY:
Colgate Palmolive and Dabur:
Colgate Palmolive and Dabur have shown correlated movement in the past, with rolling price correlation of 75% in the six-month data set. Dabur has outperformed Colgate Palmolive in the recent past. The current price ratio of Colgate Palmolive and Dabur is 7.84. The ratio is currently trading around its highs and appears stretched; we believe that it is likely to revert to its mean levels. The mean price ratio is 8.56 and the current price ratio is more than 2.8 Z-score away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy one lot Colgate June futures @ 890-892 and sell one lot Dabur June futures @ 114-115; current price ratio: 7.84; target: 8.30 and 8.50; SL: 7.40
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.
