Weekly Strategy, January Week 4 | Stocks and Commodities

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January 19, 2014
Time: 10.15 am

Weekly Strategy: Sell Nifty 6000 Put option and 6500 Call option

1. Last week we reported that Nifty is likely to trade between 6200 and 6400 and it happened that way.
2. Last week there were a number of companies declared Q3 results particularly from Banking Sector.
3. This week there are no important companies that declare results except HDFC and L&T.
4. So the volatility will be less this week.
5. So once again Nifty is expected to trade between 6200 and 6400.
6. Hence it is safe to sell 6000 Put option and 6500 Call option.
7. VIX is trading around 15 and hence it is not advisable to sell long term options.
8. Also until election results come, it is not good to sell options beyond May 2014.
9. So we are giving suggestions to sell very short term options.
10. Nifty 6000 Put closed at Rs 6 and 6500nCall closed at Rs 4.55 on Friday which works out to be Rs 500 per lot.
11. This translates into a return of 2.5% return for the span margin in two week time.
12. This is a good return considering the low risk.