Stocks

Deploy Long Straddle on Nifty50 for November series, explains Shilpa Rout

“For NIFTY the best possible strategy is LONG STRADDLE at 17800 on monthly expiry. There is an expectation of a strong one-side move from current levels, and this strategy reaps good gains from such scenarios,” says Shilpa Rout – Derivatives Lead Analyst, Prabhudas Lilladher Pvt Ltd.

In an interview with ETMarkets, Rout, said: “17700 is a very crucial level to watch on, a breach below this on a closing basis will see 17200, otherwise 18400 is not very far off” Edited excerpts

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What a week for Indian markets. Nifty reclaimed 17700 levels while Sensex also managed to hit 59K. What led to the price action?

The Nifty moved more than 2% from its past week and this move was clearly led by banking, auto, oil & gas, pharma, and metal sectors.

The positive quarterly results of major corporates along with the festive week further accelerated the market to move upward.

There was quite a broad-based participation from many segments and thus we have now an elevated support base for the bulls.

Based on October series data where do you see markets headed in November?

The Nifty rolls were seen at 76%, which is in line with a previous couple of months’ average, and Banknifty at 77%, which is way lower than the previous series average.

Option chain reflects a trading range of 40000-43000 for the Index on a broad basis, with 41500 being a crucial level to be sustained.

Banknifty monthly expiry series option chain shows 42000 straddle where maximum PE and CE contracts are added over 30000 each.

For the Nifty50 16000, 17000, and 17500 are active strike rates where the highest PE writers have built up their positions which provides a downside range if the current levels are not sustained.

On the upside, the CE writers are adding up their positions on 18000, 18500, and 19000 levels of over more than 40000, 30000, and 20000 contracts each.

For now, 17700 is a very crucial level to watch, a breach below this on a closing basis will see 17200, otherwise, 18400 is not very far off.

Any events which traders should watch out for that could dent the bull run?

There are many events lined up in the first week of the series now like the FED meeting, possible rate hikes, our domestic events of the RBI meet, and of course the war crisis.

These are a few scenarios that will lead to some turbulence in our market, but the view remains intact for the upmove on a positional basis.

Any strategy that can be deployed based on the F&O data?

For NIFTY the best possible strategy is LONG STRADDLE at 17800 on monthly expiry. There is an expectation of a strong one-side move from current levels, and this strategy reaps good gains from such scenarios.

The strategy gives good returns as soon as the sharp movement happens on one side.

One can also play through BULL CALL SPREAD: Buy 17800CE and Sell 18200CE.

(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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