Deploy Modified Call Butterfly strategy in Nifty
Considering the bullish mood, the upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty.
Research by Quantsapp Advisory, SEBI-registered research analyst (Reg. No. INH000006332)
The market rose in the past week with some decent momentum and finally closed on a positive note with Nifty gaining around 1.24% for the week ended August 5.
During the week, Nifty gyrated between 17,514 and 17,178. On the OI (Open Interest) front, longs were witnessed in Nifty as there was an increase in OI.
On the other hand, Bank Nifty gained about 2.35% as it closed the week around 37,979. Bank Nifty future gyrated between 38,270 and 37,288. Overall, Bank Nifty ended the week with gain of about 411 points and witnessed longs on OI front.
Further diving into the Nifty’s upcoming Weekly expiry, Nifty’s immediate resistance stands at 17,500 levels where nearly 62 lakh shares is the open interest followed by vital resistance at 18,000 levels where 63 lakh shares is the open interest. On the lower side, immediate support level is at 17,000 where nearly 40 lakh shares is the PE options open interest, followed by 16,500 where nearly 35 lakh share is the PE options open interest.
Looking at the Bank Nifty upcoming Weekly expiry data. On the upside, Bank Nifty immediate and vital resistance is at 38000 where nearly 20L shares is the CE open interest, whereas, on the lower side immediate and vital support is at 37000 where 16.1L shares is the PE open interest.
India VIX, fear gauge, increased 14.25% to 18.91 from 16.55 over the week. India VIX is still trading below 20. Increase in the IV has raised fear in market. Further, any downtick in VIX can push the upward move in Nifty further.
Looking at the sentimental indicator, Nifty OI PCR for the week has decreased to 1.053 from 1.358. Bank Nifty OIPCR over the week decreased to 0.914 from 0.963 compared to last Friday. Overall data indicates PE writers are less aggressive than CE writers in Nifty.
Moving further to the weekly contribution of sectors to Nifty, IT, PVTB, NBFC, FMCG have contributed on the positive side in the Nifty by 139.46, 52.94, 35.37, 49.68 points respectively. Auto contributed about 40.80 points on the positive end, while Metal also contributed positively about 30.50 points. PSU Bank and Capital Goods contributed 3.94 and 1.81 points negatively.
Looking towards the top gainer & loser stocks of the week in the F&O segment. IDFC First Bank topped by gaining over 15.5%, followed by Indiabulls Housing Finance 12.3%, IndiGo 11.2%, Whereas Balrampur Chini Mills has lost over -11.5%, Indus Tower -10.2%, GAIL -9.3% over the week.
Considering the bullish mood, the upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty.
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This trade idea was published on 8 Aug 2022 by Shubham Agarwal for Quantsapp Advisory, a SEBI-registered research analyst (Reg. No. INH000006332) and an independent proprietorship, not Quantsapp Private Limited. It reflects the market on that date and is not a current recommendation.
First published on 8 Aug 2022: prices, lot sizes and expiries are those of that time. They are illustrations for education only, not investment advice. Derivatives trading carries risk; read all scheme and risk documents before trading.