Deploy Modified Call Butterfly strategy in Nifty
Considering the bullish mood, upcoming week can be approached with a low-risk option strategy, namely, the Modified Call Butterfly Strategy in Nifty.
Research by Quantsapp Advisory, SEBI-registered research analyst (Reg. No. INH000006332)
Nifty exhibits a strong rally as it closes the week on positive note with a gain of around 1.73 percent. During the week Nifty gyrated between 17754 - 17377. On the OI (Open Interest) front, longs were witnessed in Nifty over the week gone as there was a increase in OI.
On the other hand, Bank Nifty gained about 3.02 percent as it closed the week around 39,104. Its future gyrated between 39,114 and 37,751. Overall, Bank Nifty ended the week with gain of about 1145 points and witnessed longs on OI front in the week gone by.
Further diving into the Nifty upcoming weekly expiry, Nifty immediate resistance stands at 17800 levels where nearly 60L shares is the open interest followed by vital resistance at 18000 levels where 50L shares is the open interest. On the lower side immediate support level is at 17500 where nearly 44L shares is the PE options open interest followed by 17000 where nearly 45L 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 39500 where nearly 18.5L shares is the CE open interest, whereas, on the lower side immediate and vital support is at 38000 where 17.4L shares is the PE open interest.
India VIX, fear gauge, decreased 7.2 percent to 17.56 from 18.92 over the week. India VIX is still trading below 20. Decrease in the IV has reduced 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 increased to 1.247 from 1.053. Bank Nifty OIPCR over the week increased to 1.22 from 0.914 compared to last Friday. Overall data indicates PE writers are more aggressive than CE writers in Nifty.
Moving further to the weekly contribution of sectors to Nifty. PVTB, OIL, NBFC, POWER, METAL have contributed on the positive side in the Nifty by 177.02, 60.19, 47.09, 22.86, 16.36 points respectively. FMCG contributed about 19.95 points on the negative end.
Looking towards the top gainer & loser stocks of the week in the F&O segment. IGL topped by gaining over 21.8 percent, followed by Tata Chemicals 17.7 percent, Mahanagar Gas 14.7 percent, Whereas Ipca Laboratories has lost over -9.2 percent, Abbott India -7.9 percent, Indiamart -6.6 percent over the week.
Considering the bullish mood, 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 16 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 16 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.