The following are Derivative calls for September 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 4,900-5,200 levels. The 5,070 level should sustain in the near term and is extremely crucial for any recovery towards 5,200 levels. However, in our view, in the current scenario, the Index may continue to face stiff resistance around 5,150-5,200 levels and may remain sideways-to-bullish in the near term. A breach of the 4,900 level will intensify the selling pressure.
NIFTY:
Buy Nifty September futures @ 5,000-5020* average: 4,950* stop loss: 4,900* target: 5,080-5,100* (*spot levels).
NIFTY STRATEGY:
Bull Ratio Spread: Buy one September 5100-strike call option @ 90-95 and sell two September 5200-strike call option @ 55-60; Max profit: ` 5,750 if the Nifty expires at 5200 levels; No loss on downsides as it is a net inflow strategy. BEP: 5315.
Symbol Recomm Entry Stop Loss Target Time Frame
Sep5200CE Short 50-55 5120(Spot) 30-32 1 Week
Sep4900PE Short 70-75 4950(Spot) 50-52 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGIES:
Bull-call in Chambal Fertilizers: Chambal saw accumulation of short positions last week. The stock added 66.79% addition in open interest with cost-of-carry declining from -4.96% to -28.15%. On the options front, Chambal September put option saw writing while call options saw buying, implying further upside. The 100-strike put and 110-strike call saw maximum open interest of 10 lakh shares each. The stock saw a breakout from its long-term trend line above 108 levels. We expect continued momentum in the near term, and short-covering could push up the stock further. We recommend a bull-call spread in the near term.
Buy one Chambal Sep 110 CE @ 4.5-5 and sell one 120 CE @ 1.5-2; BEP: 113.5; max profit: ` 26,000 above 120 levels; max loss: ` 14,000 if it remained below 110 levels.
Short strangle in ONGC: ONGC saw addition of short positions last week. It added 28% in open interest, with cost-of-carry falling to -4.61%. On the options front, ATM calls and puts saw addition of short positions, indicating range-bound moves. Technically, it has immediate support at 260 and 250 levels and resistance at 280 levels. The ONGC FPO will be announced next week, and we expect the stock to move sideways until the FPO is completed.
Sell one ONGC Sep 260 PE @ 7-8 and sell one Sep 280 CE@ 3-4; LBEP: 250; BEP: 290; max profit: ` 10,000 if the stock remains between 260 and 280 levels.
PAIR STRATEGY:
Sobha Developers and HDIL: Sobha and HDIL have shown correlated movement in the past, with rolling price correlation of 94% in the one year data-set. Sobha had outperformed HDIL in the recent past. The current price ratio of Sobha and HDIL is 2.12. The ratio is currently trading around its high and appears stretched; we believe that it is likely to revert to its mean levels. The mean price ratio is 1.63 and the current price ratio is more than 90 percentile away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy HDIL one lot Sep futures and 200 shares @ 104-105 and sell one lot of Sobha Sep futures @ 226-228; current price ratio: 2.12; target: 1.85 and 1.65; SL: 2.25.
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.
