The following are different strategies in Derivative for June 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 5,400-5,600 levels. The sustenance of 5,400 levels in the near term is extremely crucial for any further recovery in the markets. However, in our view, in the current scenario, the Index is expected to see stiff resistance around 5,500-5,550 levels, while a sustained move below the 5,400 mark should take the Nifty down to 5,300 levels.
NIFTY:
Buy Nifty July futures @ 5430-5440* stop loss: 5,400* target: 5,500, 5550* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty July 5500 call @ 115-118 & sell one Nifty July 5500 put @ 120-122; Upper Break-even point: 5735; Lower break-even point: 5265; Max profit: ` 11,750 @ 5500 levels; Time frame: 7-8 days.
Symbol Recomm Entry Stop Loss Target Time Frame
June5500CE Long 35-38 5430(Spot) 60-62 2-3 days
June5400PE Short 80-85 5430(Spot) 65-66 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bull-call spread in SBI: SBI gained around 6% in Friday’s trade. The stock saw significant closure of short positions on Friday. The momentum in the counter is likely to continue this week. On the options front, OTM call options of the June series saw closure of short positions, while OTM put options witnessed writing, indicating the stock is likely to trade on a positive note in the near term. In this scenario, we suggest a bull-call spread strategy in the stock at current levels.
Buy one June 2300 call @ 27-28 and sell one June 2350 call @ 10-11; BEP: 2318; max profit: ` 4,000 if the stock expires above 2350 levels; max loss: ` 2,250 if the stock expires below 2300 levels.
Short Strangle in Reliance: Reliance has been trading with a bearish bias recently. However, the stock is expected to consolidate at current levels. It has a strong resistance at 900 levels, while writing in June-series 860-strike and 840-strike put options indicate the stock is likely to find support at these levels. In the current scenario, we recommend a short strangle strategy in the stock.
Sell one June 880 call @ 9-10 and sell one June 860 put @ 8-9; UBEP: 897; LBEP: 843; max profit: ` 4,250 if the stock expires between 860 and 880 levels
PAIR STRATEGY:
ICICI Bank and HDFC Bank
ICICI Bank and HDFC Bank have shown correlated movement in the past, with rolling price correlation of 80% in the six-month dataset.
HDFC Bank had outperformed ICICI Bank in the recent past. The current price ratio of ICICI Bank and HDFC Bank is 0.44. 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 0.54 and the current price ratio is more than 2.24 Z-score away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy ICICI Bank one lot July futures @ 1068-1072 and sell one lot HDFC Bank July futures @ 2406-2410; current price ratio: 0.44; target: 0.50 and 0.54; SL: 0.38.
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/traders.
