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 5,300-5,500 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 5,400-5,450 levels, while a sustained move below the 5,300 mark should take the Nifty down to 5,200 levels.
NIFTY:
Buy Nifty June futures @ 5320-5330* stop loss: 5,300* target: 5,400, 5450* (*spot levels)
Sell Nifty June futures @ 5400* Average: 5430* stop loss: 5,450* target: 5,350, 5320* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty June 5400 call @ 60-61 & sell one Nifty June 5400 put @ 90-92; Upper Break-even point: 5550; Lower break-even point: 5250; Max profit: ` 7,500 @ 5400 levels.
Symbol Recomm Entry Stop Loss Target Time Frame
June5500CE Short 25-30 5430(Spot) 9-10 1 Week
June5300PE Long 40-45 5430(Spot) 60-62 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bear-put spread in Reliance: Reliance has been trading on a bearish note over the last few trading sessions. Technically, the stock has
broken down below its crucial support of 890 levels. It saw significant accumulation of short positions in the last couple of trading sessions. On the options front, OTM June-series call options saw significant writing, indicating that the stock is likely to trade on a negative note in the near term. In such a scenario, we suggest a bear-put spread strategy in the stock at current levels.
Buy one June 860 put @ 12-13 and sell one June 840 put @ 7-7.5; BEP: 854; max profit: ` 3,500 if stock expires below 840 levels; max loss: ` 1,500 if stock expires above 860 levels.
Bear-put spread in Infosys: Infosys has been trading on a negative note last week. The stock has broken down below 2,800 levels and
has seen fresh build-up of short positions last week. On the options front, OTM put options witnessed buying, indicating that the counter is likely to trade on a negative note in the next few trading sessions. In the current scenario, we recommend a bear-put spread in the stock.
Buy one June 2750 put @ 29-30 and sell one June 2700 put @ 15-16; BEP: 2735; max profit: ` 4,375 if stock expires below 2,700 levels; max loss: ` 1,875 if stock expires above 2,750.
PAIR STRATEGY:
SAIL and JSPL have witnessed correlated movement in the past, with rolling price correlation of 80% in the six-month data set. JSPL had outperformed SAIL in the recent past. The current price ratio of SAIL and JSPL is 0.20. 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 0.26 and the current price ratio is more than 2.26 Z-score away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy SAIL two lots June futures and 300 shares @ 136-137 and sell one lot of JSPL June futures @ 632-634; current price ratio: 0.20; target: 0.24 and 0.26; SL: 0.18.
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.
