Option Strategies | Stocks and Commodities

August 27, 2013.
Time: 8.30 A.M.

Premarket Comment:

1. Despite 3 continues days of up move, FIIs uniformly sold in all 3 sessions. Yesterday, FIIs have sold over 500 Crores in cash market and over 1000 Crores in index futures.

2. Yesterday, US markets fell as Syria tension escalated. Due to this crude oil will move up and our import bill will go up, adding pressure to CAD.

3. Food security bill has been passed in Lower House, which is negative for market as food subsidy will increase, which in turn will affect the fiscal deficit.

4. Indian rupee is likely to depreciate further and may test all time low.

5. Although Asian markets are not falling much, Indonesia is falling. As this time, emerging markets, particularly Brazil, Indonesia and India, are singled out for bigger punishment, Indian market is likely to fall more than its Asian counterparts.

6. SGX Nifty is trading around 50 points lower.

7. As European markets have not factored in the Syrian news, which came after European markets closed, European markets are likely to open lower which will add to negative sentiment in the second half of the trading session.

Trading Strategies:

1. If the market opens 40 to 50 points lower, sell Bank Nifty Call options. Depending on your risk ability, you may choose 9500 Call to 9800 Call.

2. Sell Nifty 5500 Call option as there will be lot of resistance around this level.

3. Sell ICICI Bank 840 Call option, HDFC Bank 640 Call option and Axis Bank 1000 Call option.

As rate sensitives will be under pressure, above strategies are recommended.
When rupee depreciates, IT stocks will do well. So as an Hedge for above strategies, Sell Infy 2950 Put option.

If the market falls as expected all above strategies will give good profits, in such case, leave all the positions open as the market is not likely to move up in the next few days due to FII selling, you will gain more due to time value.

In case if the market does not fall much, you may square up all the positions at the end of the day.