Hello guys, Hope you already follow the instructions shared in the last Nifty and bank nifty options strategy post and took some precautions with a proper hedge for your portfolio.
We saw many people are saying that this downfall is because of FPI Tax only and if the government left that tax, this fall will stop. I do not agree with them. FPI tax alone is not an issue, there are several other issues too which are creating pressure on the global economy. Here is the study by SBI discussing slowdown in the economy
Valuations are also high and every fall will give us an opportunity to invest good scripts at a reasonable price. So it’s time to revise our strategy and start investing in fundamentally strong scripts.
If you are holding some scripts cover calls can provide you with some hedge, so focus more on “How to protect the capital?” and take precalculated risk only especially safe traders.
Nifty Chart this week:
In my last weekly analysis and option strategy post I shared that Nifty is trading in a reversal zone. I have observed that Nifty always respect this zone.
We can expect a small recovery from here but chances are very low because sentiments are totally weak. 200 DSMA is also acting as a strong resistance level. So the trend is down.
Sell on the rise should be our strategy until nifty is trading below 200 DSMA. Once nifty manages to sustain above 200 DSMA at least for one week, then only we can say that trend is changed now.
RSI & MACD giving a sign for some recovery but will we get that sustainable recovery? need to watch closely.
Open Interest Analysis:
Based on option chain data, the highest Open interest stands at 11100 CE & 10900 PE, followed by 11000 CE & 11000 PE. PCR of all strikes is 0.95, which is a neutral zone. PCR at 10900 stands at 4.85, which is acting as an immediate support level, PCR at 11100 stands at 0.11, which is acting as a resistance level. Equally, substantial indicator Option Pain is at 11000, indicating weekly expiry at 11000. A shift in option pain will provide further levels.
We saw a substantial Open interest buildup in PUT side, which indicates that the market is trying to take some support around 11000-10800 levels.
As per the Option chain data, Resistance levels are 11100 & 11200, and Support levels are 11000 & 10900. So the expected range based on current data should be 11200 – 10900.
Nifty options Strategy:
Bank Nifty Chart this week:
As we discussed in the last week, rage between 50% – 61.8% Fibonacci levels are acting as a reversal zone. 200 DSMA is standing around 28400 which is also a very strong resistance zone.
If we look at upper levels, 28400 & 28800 are the two important and crucial levels which need to break for more upside journey. I will go long only above 28800 till then sell-on-rise should be our strategy.
On the lower side, 27700 will act a strong support level, close below will lead to more lower levels.
Open Interest Analysis:
Based on option chain data, the highest open interest stands at 28000 CE & 27500 PE followed by 28500 CE & 27000 PE. PCR of all strikes stands at 1.1, which is a slightly overbought zone. PCR at 27800 stands at 3.05, which is acting an immediate support zone. PCR at 28200 stands at 0.15, which is acting as an immediate resistance zone. Option pain stands at 28000, giving us expiry level. Keep tracking this option pain level. A shift in option pain will provide further levels for expiry.
Bank Nifty Options Strategy:
Possible adjustments: Shift Put Spread to 200 – 3000 points up after a breakout from 28459. Same shift call spread to 200-300 points down after a breakdown at 27745.
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DISCLAIMER: – we are not a SEBI research analyst. Views posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.
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