The following are Derivative calls for August 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 5,500 level should sustain in the near term, and is extremely crucial for any further upmove towards the 5,600 mark. However, in our view, in the current scenario, the Index may continue to face stiff resistance around 5,550-5,600 levels and may remain range-bound in the short term. On the other hand, a breach of 5,400 levels will lead to increased selling pressure.
NIFTY:
Buy Nifty Aug futures @ 5,470-5480* average: 5,420* stop loss: 5,400* target: 5,550-5560* (*spot levels)
NIFTY STRATEGY:
Sell one Nifty Aug 5500 call & sell one Nifty Aug 5500 put @ a cumulative premium of 220-225; Upper Breakeven point: 5720; Lower break-even point: 5280; Target: 165-170 (cumulative premium); Time frame: 8-10 days.
Symbol Recomm Entry Stop Loss Target Time Frame
Aug5600CE Short 60-65 5580(Spot) 40-42 1 Week
Aug5400PE Short 75-80 5400(Spot) 55-56 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bull-call spread in Idea: Idea has been trading on a bullish note last week. The stock has seen accumulation of long positions. On the options front, ATM calls of the August series saw addition of long positions while OTM put options observed writing, indicating the stock is likely to trade on a positive note in the near term. Technically, it looks likely to touch 100 levels once it sustains above 95 levels. In such a scenario, we suggest a bull-call spread strategy in the stock at current levels.
Buy one Aug 95 call @ 3.5-4.0 and sell one Aug 100 call @ 2-2.25; BEP: 97; max profit: ` 12,000 if stock expires above 100 levels; max loss: ` 8,000 if stock expires below 95 levels.
Put ratio spread in Reliance: Reliance has been trading on a negative note in the last few trading sessions. Technically, the stock has broken its crucial resistance of 840 and is likely to test 800 levels. The OTM put options saw buying while futures observed accumulation of short positions, indicating the stock is likely to trade on a bearish note in the near term. In such a scenario, we recommend a put-ratio spread strategy in the stock.
Buy one Aug 820 put @ 22-23 and sell one Aug 800 put @ 14-15 and sell one Aug 780 put @ 9-10; SL: 760; max profit: ` 5,000 if stock expires between 780 and 800 levels.
PAIR STRATEGY:
Dena Bank and Andhra Bank: Dena Bank and Andhra Bank saw correlated movement in the past, with a rolling price correlation of 82% in the six-month data-set. Andhra Bank had outperformed Dena Bank in the recent past. The current price ratio of Dena Bank and Andhra Bank is 0.57. The ratio is currently trading around its highs and appears stretched; we believe it is likely to revert to its mean levels. The mean price ratio is 0.68 and the current price ratio is more than 2.55 Z-score away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy Dena Bank one lot August futures @ 80-82 and sell one lot Andhra Bank August futures @ 136-138; current price ratio: 0.57; target: 0.65 and 0.68; SL: 0.50.
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.
