Deploy modified call butterfly strategy in Nifty
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 Nifty closed the week ended November 12 at 18424 with a gain of around 1.26 percent. The index gyrated between 18,030 and 18,439 through the week. On the Open Interest (OI) front, a long built-up was seen in the Nifty over the previous week.
Bank Nifty gained about 0.77 percent and closed the week around 42,293. Bank Nifty future moved between 41,469 and 42,438 and ended the week with gain of about 876 points.
Further diving into the Nifty upcoming weekly expiry, the immediate resistance stands at 18,500 levels where nearly 49.3 lakh shares are in the open interest followed by a vital resistance at 18,700 levels where about 42.40 lakh shares are in the open interest.
On the lower side, the immediate support level is at 18,300, where nearly 58.89 lakh shares are in the PE options open interest, followed by 18,000 where nearly 77.2 lakh shares in the PE options open interest. Max Call OI was witnessed at 19000 levels where about 93.33 lakh shares is the open interest.
Looking at the Bank Nifty upcoming weekly expiry data, on the upside, immediate and vital resistance is at 43000 where nearly 14.86 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 42000 where 30.60 lakh shares is the PE open interest.
India VIX, fear gauge, decreased to 14.30 from 15.66 over the week. India VIX is trading at low levels. Decrease in India VIX has allayed the fear in the market. Further, any downtick in India VIX can push the upward move in Nifty further and vice versa.
Looking at the sentimental indicator, Nifty OI PCR for the week has gained to 1.218 from 1.123. Bank Nifty OIPCR over the week increased to 1.159 from 0.907 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. Private Bank and Information Technology contributed the most on positive side in Nifty i.e., by 88.06 and 84.25 points respectively. Oil & Gas and Metal contributed about 69.14 and 25.58 points, respectively on positive side in Nifty.
Pharma and FMCG contributed 28.68 and 16.45 points on negative side respectively. Auto contributed about 18.36 points negatively in Nifty.
Looking towards the top gainer & loser stocks of the week in the F&O segment. Bank of Baroda topped by gaining over 11.9%, followed by Amara Raja Batteries 9.8%, Motherson 9.4%, Britannia Industries 7.6%, Whereas GNFC lost -14.8%, Divis Lab has lost over -12.5%, Aurobindo Pharma -11.7%, over the week.
The upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty.
Learn and read more about sgx nifty future from Quantsapp classroom which has been curated for understanding of nse option chain from scratch, to enable option traders grasp the concepts practically and apply them in a data-driven trading approach.
This trade idea was published on 14 Nov 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 14 Nov 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.