The following are Derivative calls and different derivative strategies for weekly 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 5,600-5,800 levels. The 5,600 levels should sustain in the near term, and is extremely crucial for any uptrend. However, in our view, in the current scenario, the Index expects stiff resistance around 5,700 levels, while a sustained move above the same will guide it towards 5,800 levels. On the other hand, a breach of 5,600 levels will lead to increased selling pressure.
NIFTY:
Buy Nifty July futures @ 5,640-5,650* stop loss: 5,580* target: 5,700, 5750* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty July 5700 call & sell one Nifty July 5600 put @ a cumulative premium of 130-135; Upper Break-even point: 5830; Lower break-even point: 5470; Max profit: ` 6,500 in a range of 5600-5700 levels; Time frame: 10-12 days
Symbol Recomm Entry Stop Loss Target Time Frame
July5600PE Short 65-70 5600(Spot) 45-46 1 Week
July5800CE Short 35-40 5700(Spot) 15-18 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bull-call spread in Bharti: Bharti has been trading with a bullish bias over the last few trading sessions. The stock gained 3.83% last week. It saw accumulation of long positions and is likely to touch 420-425 levels in the near term. On the options front, the July 420-strike call option witnessed significant buying, while OTM put options saw writing. In such a scenario, we suggest a bull-call spread strategy on the stock at current levels.
Buy one July 400 call @ 10-11 and sell one July 420 call @ 4-5; BEP: 407; max profit: ` 13,000 if the stock expires above 420 levels; max loss: ` 7,000 if the stock expires below 400 levels.
Bull-call spread in DLF: DLF saw buying over the last few days. The stock gained 7.65% W/W. In options, OTM July call options witnessed buying. The maximum open interest is currently at the July 240-strike call option. Futures saw accumulation of long positions. The stock is likely to cross its immediate resistance of 240 levels and touch 250 levels in the near term. In the current scenario, we recommend a bull-call spread strategy in the stock.
Buy one July 240 call @ 6-6.5 and sell one July 250 call @ 3-3.5; BEP: 243.5; max profit: ` 6,500 if the stock expires above 250; max loss: ` 3,500 if the stock expires below 240.
PAIR STRATEGY:
Wipro and Tech Mahindra
Wipro and Tech Mahindra witnessed correlated movement in the past, with rolling price correlation of 78% in the six-month dataset. Tech Mahindra has outperformed Wipro in the recent past. The current price ratio of Wipro and Tech Mahindra is 0.59. 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 0.68 and the current price ratio is more than 2.59 Z-score away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy Wipro three lots July futures @ 430-432 and sell two lots of Tech Mahindra July futures @ 736-738; current price ratio: 0.59; target: 0.64 and 0.68; SL: 0.55.
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.
