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 5,050 level should sustain in the near term and is extremely crucial for any recovery towards 5,200 levels. However, in our view, currently, 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 selling pressure.
NIFTY:
Buy Nifty September futures @ 5,050-5060* average: 5,000* stop loss: 4,950* target: 5,150-5,170* (*spot levels).
NIFTY STRATEGY:
Nifty Short Strangle: Sell 1 lot of 4900 PE @ 40-42 and 5200 CE @ 40-42. Upper breakeven point (UBEP): 5280 and Lower breakeven point (LBEP): 4820. Maximum Profit: ` 4000, Maximum Loss: Unlimited.
Symbol Recomm Entry Stop Loss Target Time Frame
Sep5100CE Long 75-80 5000(Spot) 110-112 1 Week
Sep4900PE Short 40-45 4980(Spot) 20-22 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGY:
Short strangle in Reliance Industries: Reliance saw accumulation of long positions last week. The stock added 3.31% addition in open interest, with cost-of-carry rising from 3.98% to 9.52%. Reliance ATM call options saw buying, while both OTM calls and puts saw writing, indicating the stock will remain range-bound with upward bias. The maximum accumulation is evident in the 820 and 840 call option strikes while the 780 and 800 put-option strikes saw the highest addition. Technically, the stock is expected to be in the 800-850 range in the near term. Accordingly, we recommend a short strangle.
Sell one Reliance Sep 860 CE @ 8-9 and sell one 800 PE@ 9-10; LBEP: 787; UBEP: 877; max profit: ` 4,250 if the stock remains between 800 and 860.
Bear-put in Tata Steel: Tata Steel saw accumulation of short positions last week. It added 15.43% in open interest with negative cost-of-carry. On the options front, ATM call and put options saw addition of long positions, indicating the stock to remain volatile in the near term. Technically, it looks weak and is expected to test its recent lower support at 440 and 425 levels. Thus, we recommend a bear-put strategy in the stock.
Buy one Tata Steel Sep 460 PE @ 13-14 and sell one Sep 440 CE @ 7-8; BEP: 453; max profit: ` 6,500 below 440 levels; max loss: ` 3,500 if the stock remains above 460 levels.
PAIR STRATEGY:
JSW Steel and Jindal Steel: JSW Steel and Jindal Steel have shown correlated movement in the past, with rolling price correlation of 94.5% in the last six-month data-set. Jindal Steel had outperformed JSW Steel in the recent past. The current price ratio of JSW Steel and Jindal Steel is 1.23. The ratio is currently trading around its lows and appears stretched; we believe that it is likely to revert to its mean levels. The mean price ratio is 1.38 and the current price ratio is more than 94 percentile away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy JSW Steel one lot Sep futures and 147 shares @ 685-688 and sell one lot of Jindal Steel Sep futures @ 545-548; current price ratio: 1.23; target: 1.30 and 1.36; SL: 1.15.
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.
