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 4,700-5,000 levels. The 4,900 level should sustain in the near term and is extremely crucial for any recovery towards 5,000 levels. However, in our view, currently, the Index may continue to face stiff resistance around 4,950-5,000 levels, and is likely to remain sideways-to-bearish in the near term. Any sustenance below the 4,900 level will intensify selling pressure.
NIFTY:
Sell Nifty October futures @ 4,880-4,900* average: 4,950* stop loss: 5,000* target: 4,800-4,780* (*spot levels)
NIFTY STRATEGY:
Buy 1 Lot of Oct. Nifty 4800 PE @ 158-160 and Sell 1 Lot of Oct Nifty 4600 PE @ 100-102. Break-even point: 4740. Maximum Profit: Rs. 7000 and Maximum Loss: Rs. 3,000.
Symbol Recomm Entry Stop Loss Target Time Frame
Sep5000CE Short 25-30 4950(Spot) - 1 Week
Oct4800PE Long 145-150 5000(Spot) 175-180 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGY:
Long strangle in DLF: DLF saw accumulation of short positions last week. The stock added 16.23% addition in open interest, with cost-of-carry rising from -75.09% to -33.88%. On the options front, DLF OTM call and put options saw buying in the October series. The maximum accumulation is evident in the 200 and 210 call-option strikes while the 180-strike put saw the highest addition. Technically, the stock has been range-bound for the last couple of weeks. We expect the stock to remain volatile and likely to break the range in the next few weeks. Thus, we recommend a long strangle in the stock.
Buy one DLF Oct 200 CE @ 9-10 and buy one 180 PE @ 7-8; LBEP: 162; UBEP: 218; max loss: Rs. 18,000 if the stock remains between 180 and 200; max profit: unlimited.
Bear put in L&T: L&T saw accumulation of short positions last week. It added 29.71% in open interest, with decrease in cost-of-carry from 1.92% to -6.50%. 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 lower support at 1,390 levels. We recommend bear-put strategy in the stock.
Buy one L&T Sep 1450 PE @ 27-28 and sell one Sep 1400 PE @ 13-14; BEP: 1435; max profit: Rs. 8,750 below 1400 levels; max loss: Rs. 3,700 if the stock remains above 1450 levels.
PAIR STRATEGY:
Tata Power and NTPC: Tata Power and NTPC have shown correlated movement in the past, with rolling price correlation of 80% in the last six-month data-set. NTPC had outperformed Tata Power in the recent past. The current price ratio of Tata Power and NTPC is 5.93. 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 6.85 and the current price ratio is more than 89 percentile away from the mean ratio. There is a high probability of convergence between the stocks from current levels.
Buy Tata Power one lot Oct futures and 90 shares @ 975-978 and sell one lot NTPC Oct futures @ 165-168; current price ratio: 5.93; target: 6.50 and 6.75; SL: 5.30.
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.
