Replete Weekly analysis

Replete Weekly Analysis and Option Strategies For 4th Mar – 8th Mar

Hello Guys,

Hope you all are doing Good.

From February we resume our weekly analysis report and got a very good response. I’m very thankful for all your support friends.

Last month we made some strategies which gave us a very good return. Options were introduced to hedge our portfolios and this is the main function of options, If we trade them with their actual functions, we can easily generate some good and consistent return with full protection of our capital. We are trading in these option hedging strategies because capital protection is our primary goal. We are happy with less return but return must be consistent and capital must be protected.

Now let’s come to our analysis part. As monthly expiry has just started so now let’s discuss what should be our strategy for this entire month based on charts.

Nifty IDX-10863.50

niftyIf we look at the chart, we find that this week nifty trading is a range only. As we discussed in our earlier posts nifty is trading in a range of 250 Points from the last couple of weeks. 10600 is strong support and 11000 is a strong resistance as per the current chart pattern. Now from this week, There are two scenarios, Either it will take some resistance at 11000 and will come back to its support level or it will give a breakout and might go till 11200 as per the upper trendline which is making Higher Highs. So levels for this months we need to keep are Resistance- 11000 & 11200 & Supports- 10700-10600. One thing we must keep in mind that due to geopolitical conditions, Volatility is already high and there is no clear indication for the direction. So any naked Short position and unlimited risk strategies not advisable. Due to high volatility, you will get a higher premium to eat if you short an option but it should be protected with a proper hedge.

According to Monthly Expiry open interest data: Highest Open interest stands at 11000 CE & 10700 PE followed by 11500 CE & 10600 PE.  PCR of all strikes is 1.32 which is an overbought region. The range is little wide for this expiry because 10000 PE also carries around 20 lakh open interest.

On weekly Expiry, PCR at 11000 is 0.16 which will act as s strong resistance on the other hand PCR at 10800 is 2.14 which will act as a strong support zone. so as per current data 11000-10800 is our weekly range.  For PCR you can refer to our previous post. 

Monthly Strategy: IRON CONDOR

StrategyPositionPOPMaxROCMax ProfitMax LossMargin
Iron Condor+1X 10500PE
-1X 10800PE
-1X 11000CE
+1X 11300CE
45.33%6.85%₹ 12,112.50₹ 10,387.50₹ 1,76,827.86

Iron Condor Payoff Chart

Possible Adjustments: Breakevens are 10638.50 & 11161.50. If you got a breakdown from 10638.50, Shift Call speed, Short 10800 CE & Buy 11000 CE. If You got breakout at 11161.50, Shift Put Spread to Short 11000 PE & Buy 10800 PE.

* This strategy is for Month Expiry with Monthly Expiry Strikes.

BANKNIFTY IDX: 27043.90

BankNifty

BankNifty is forming a Triangle pattern. Breakout or Breakdown will decide further move. 26600-26450 is strong support zone.  Until BankNifty is holding this support zone, we can expect down side movement.  There is no clear indication for fresh buy or sell for our positional trade.

According to Monthly Open Interest chain: Highest Open Interest stands at 27500 CE & 26500 PE followed by 27000 CE & 27000 PE. PCR of all strikes is 1.99 which is a very strong overbought Region. As per PCR data, we can expect some downside movement in bankside but a fresh sell must be initiated only below 26400 level, Till then trade with neutral strategies. Due to high volatility, Premium is also high so premium should be credit in our account. Strategies could be Iron Butterfly, Iron Condor, Call ratio spread, Bear call spread etc..

Here one thing always keeps in mind before choosing a strategy, Your downside must be protected. Avoid trading in PUT Ratio Spread like strategies where risk is unlimited on the downside. Because downside movement is much faster than Upside movement, so the first priority must be to protect our capital from any black swan event.

Monthly Strategy: Iron Condor

StrategyPositionPOPMaxROCMax ProfitMax LossMargin
Iron Condor+1X 26500PE
-1X 26800PE
-1X 27100CE
+1X 27400CE
26.46%3.67%₹ 4,758.00₹ 1,242.00₹ 1,29,694.45

Iron Condor PayOff ChartPossible Adjustments: Breakevens 26562.10 & 27337.90. After Breakdown at 26562.10, Shift Call Spread at short 26800 CE & 27100 CE Buy. Breakout at 27337.90, Shift Put Spread at 27100 PE short & 26800 PE Buy.

* This strategy is for Month Expiry with Monthly Expiry Strikes.

Post your comments in the comment box if you have a query related to these options strategies. You can ask any question related to options trading in the comment box.

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If you need More real-time assistance on these strategies, Can open a trading account with us and you will get real-time assistance on every month on these hedging strategies.

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.

About Sachin Sival

Founder of Replete Equities, Certified Market Professional, Trader by passion, Option Writer, A keen follower of the Indian equity market,

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