The following are Derivative calls for November 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 5,000-5,200 levels. The 5,200 level needs to be taken (and sustained) for any further uptrend towards 5,500 levels. In our view, if the Nifty fails to break 5,200 levels, then profit-taking could drag the Index back to the 5,000 mark, below which intense selling pressure could creep in to take the Nifty towards 4,800 levels.
NIFTY:
Buy Nifty November futures @ 5,030-5050* stop loss: 4,990* target: 5,100, 5,120* (*spot levels)
Sell Nifty November futures @ 5,130-5150* stop loss: 5,200* target: 5,050, 5,030* (*spot levels)
NIFTY STRATEGY:
Long strangle: Buy 1 lot of Nov 5000 PE @ 115-120 and Buy 1 lot of Nov 5100 CE @ 140-145. UBEP: 5365 and LBEP: 4735. Max Profit: Unlimited and Max Loss: 13250. SL: 200 (Cumulative Premium)
Symbol Recomm Entry Stop Loss Target Time Frame
Nov5100CE Long 125-130 4990(Spot) 150-155 1 Week
Nov5200CE Short 100-105 5170(Spot) 75-76 1 Week
::DIFFERENT STRATEGIES::
HYBRID STRATEGY:
Bear-put in Hindalco: Hindalco saw accumulation of short positions last week. The stock saw 2.58% addition in open interest with no major change in cost-of-carry. On the options front, Hindalco November OTM calls of 130 and 140 strikes saw writing, while ATM and OTM puts saw buying, indicating further downside in the stock. Technically, the stock has been on a downtrend, making lower tops and lower bottoms over the last one year. We expect downtrend to continue in the stock in the near term to test 105-110 levels. Thus, we recommend a bear-put strategy in the stock.
Buy one Hindalco Nov 120 CE @ 5.5-6 and sell one 110 CE @ 3-3.5; LBEP: 117; max profit: ` 7,000 if stock remains below 110; max loss: ` 3,000 if stock remains above 120.
Long strangle in Tata Motors: Tata Motors witnessed accumulation of short positions last week. The stock had seen rollover of short positions into the November series. November call and put options across strikes saw addition of long positions, indicating the stock is likely to remain volatile in the near term. Technically, the counter saw a strong bounce in the last couple of weeks, and the momentum is likely to continue in the near term. We expect the stock to remain highly volatile within the broad range of 150-210 levels. We recommend a long strangle in the stock.
Buy one Tata Motors Nov 170 PE @ 6.5-7.0 and buy one Nov 190 CE @ 4.5-5; UBEP: 202 and LBEP: 158; max loss: ` 15,000 if stock remains between 170 and 190 levels.
PAIR STRATEGY:
HPCL and BPCL: HPCL and BPCL have shown correlated movement in the past, with rolling price correlation of 88% in the last six month data-set. BPCL had outperformed HPCL in the recent past. The current price ratio of HPCL and BPCL is 0.53. 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 0.60 and the current price ratio is more than 85 percentile away from the mean ratio. There is a high probability of convergence from current levels.
Buy HPCL one lot Nov futures @ 342-344 and sell one lot of BPCL Nov futures @ 646-648; current price ratio: 0.53; target: 0.58 and 0.60; SL: 0.48.
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.
