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Weekly Options Strategy: Keep target at 16,000-16,200, go for bull call ladder


Strategy Positions

Buy 7 July 15800 Call at 141; Sell 7 July 16000 Call at 64.5 and Sell 7 July 16200 Call at 20.5 (1 Lot Each).

Rationale

The Nifty remained muted last week despite being quarterly and monthly settlement and after testing series VWAP near 15900, it retraced below 15700 levels. Sell-off seen among oil & gas heavyweights due to policy change was the major reason behind Friday’s decline. However, broader markets performed relatively better and closed the week in green.

Going ahead, considering upcoming quarterly results a round of short covering can be expected and Nifty is likely to move towards 16,000 in the coming sessions.

From the data perspective, Call open interest for the coming weekly settlement is visible at 16,000 strike while the Put base is placed at ATM 15600 strike. Hence positive bias should continue till Nifty is sustaining above 15,600 levels and it may attempt towards 15900/16000 levels in coming sessions.

From the rollover perspective, FIIs net shorts have remained largely intact and positions are rolled into July series as net shorts in index futures remained in excess of 1 lakh contracts. On the other hand, net longs in stock futures remained higher indicating stock specific accumulation.

Keeping the target between 16,000 and 16,200, we feel traders can go for Bull call ladder strategy where maximum profit will be made between 16,000 and 16200. However, one needs to be careful on the higher side also as strategy will start making loss if Nifty moves above 16350 in the current settlement.

Traders will be in profit if Nifty remains or expires between the levels of 15,850 to 16,350.

Pay-Off Diagram:

Payoff diagram1Agencies

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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