Weekly Investment Strategy, October Week 3 | Stocks and Commodities

P R Sundar, Aditya Trading Solutions

Weekly Investment Strategy:

Low Risk Strategy 1: Sell December Expiry 5000 Put option and 7000 Call option.
High Risk Strategy 2: Sell Reliance 800 Put option and 940 Call option.

Strategy 1:

1. Markets will be highly volatile due to US Debt issue.
2. Nifty is trading closer to resistance level.
3. Either it may fall from here or it may break out to test all time high, depending upon UD Debt. ceiling outcome.
4. So we give a strategy with low risk. Sell Dec. expiry 5000 Put and 7000 Call, for a combined premium of Rs 48. 
5. This return works out to be 4% per month return and 48% annualised return.
6. Considering the volatile nature of the markets, event risks ahead and low risk involved, this return seems to be good.

Strategy 2:

1. On Monday evening Reliance will declare results.
2. So on Tuesday the volatility in this counter will collapse and hence the premium.
3. Reliance is expected to declare good results.
4. But it will not be too good to lift the stock price beyond 900.
5. Even if the result is bad, still there will be a strong support at Rs 800.
6. So sell Reliance 800 Put and 940 Call trading at a combined premium of Rs 10.50, Rs 2625 per lot.
7. But suqare off the positions by Tuesday afternoon as long as you have good profit.
8. One can expect a profit of at least Rs 1250 per lot.

 Follow Up:

1. October week 2 strategy in Infy 2400 Put and 3650 call has given a very good profit of more than Rs 8000 profit per lot. If you have not squared off the positions, you may square off tomorrow.
2. October week 1 strategy of selling Dec. expiry 4500 Put option is also giving a profit of more than Rs 500 per lot. Continue to hold. As suggested, if Nifty 7000 Call is trading more than Rs 25, then sell it as hedge for this position.
3. September week 4 strategy of selling Dec. expiry 5000 Put and 7000 Call is also giving a profit of more than Rs 1300 per lot. Needless to say, continue to hold as this week aslo we are giving the same strategy.