The following are Derivative calls for July 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 5,500-5,700 levels. The 5,700 levels should sustain in the near term, and is extremely crucial for any further uptrend. However, in our view, in the current scenario, the Index may continue to face stiff resistance around 5,700 levels and may remain range-bound in the short term. On the other hand, a breach of 5,500 levels will lead to increased selling pressure.
NIFTY:
Buy Nifty July futures @ 5,600* average: 5,550* stop loss: 5,500* target: 5,680, 5700* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty July 5600 call & sell one Nifty July 5600 put @ a cumulative premium of 95-98; Upper Break-even point: 5695; Lower break-even point: 5505; Max profit: ` 4750 if the Nifty expires 5600 levels; Time frame: Expiry
Symbol Recomm Entry Stop Loss Target Time Frame
Aug5500PE Short 58-60 5550(Spot) 30-32 1 Week
July5700CE Short 25-30 5680(Spot) Expiry
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bull-call spread in SBI: SBI has been consolidating in a narrow range over last week. The stock witnessed accumulation of long positions. The momentum in the stock is likely to continue this week. On the options front, July-series ATM call options 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 such a scenario, we suggest a bull-call spread strategy in the stock at current levels.
Buy one July 2500 call @ 30-32 and sell one July 2550 call @ 12-13; BEP: 2520; max profit: ` 2,500 if the stock expires above 2550 levels; max loss: ` 3,750 if the stock expires below 2500 levels.
Short strangle in Reliance: Reliance has been range-bound over the last few trading sessions. Technically, the stock has strong resistance at 900 levels while it has strong support at 840 levels. The maximum open interest is currently at the July-series 860-strike put and the 900-strike call options, further indicating that the stock is likely to trade in range of 860-900 levels in the near term. In the current scenario, we recommend a short-strangle strategy in the stock.
Sell one July 880 call @ 11-12 and sell one July 860 put @ 7-8; UBEP: 898; LBEP: 842; max profit: ` 4,500 if the stock expires between 860 and 880 levels.
PAIR STRATEGY:
Mphasis and Hexaware: Mphasis and Hexaware have shown correlated movement in the past, with rolling price correlation of 77% in the one-year data-set. Hexaware has outperformed Mphasis in the recent past. The current price ratio of Mphasis and Hexaware is 5.48. 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 6.75 and the current price ratio is more than 2.55 Z-score away from the mean. There is a high probability of convergence between the stocks from current levels.
Buy Mphasis one lot August futures and 245 shares @ 424-426 and sell one lot of Hexaware August futures @ 79-80; current price ratio: 5.48; target: 6.25 and 6.50; SL: 5.00.
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.
