Weekly Strategy, May Week #1 | Stocks and Commodities

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April 26, 2014
Time: 9.45 pm

Weekly Strategy: Sell Bank Nifty 11000 Put option and 14700 Call option.

1. Option prices are trading at such a high level, this is a record in Indian stock markets.
2. All due to May 16 election outcome.
3. VIX has reached the high of 38 plus, which is three year high and then started cooling.
4. All key private sector bank results are out.
5. Yes Bank, Axis Bank declared very good results.
6. HDFC and ICICI declared results that are in line with expectation.
7. Key PSU Banks like SBI, PNB and BOB, will declare results only after May 16.
8. From now to May 16, not much volatility is expected in Bank Nifty.
9. So it will be good to sell Bank Nifty 11000 Put option and 14700 Call option as Bank Nifty is expected to trade plus or minus 500 points from the current level.
10. Bank Nifty 11000 Put option closed at Rs 82.75 and 14700 Call option closed at Rs 153.20 on Friday.
11. The total premium works out to be Rs 5900 per lot.
12. Continue to monitor the position and if profitable, exit just before May 16.
13. Also, in case if Bank Nifty 14800 Call is opened on Monday, then choose that instead of 14700 Call option.