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)
Bank Nifty Futures gained about 2.50% as it closed the week around 42,197.
Nifty Future closes the week around 17,882, gaining about 1.35 percent. During the week, it gyrated between 17,890 and 17,653. On the Open Interest (OI) front, short covering was witnessed in Nifty Futures over the week gone by as there was a decrease in OI, with gains witnessed in Nifty weekly closing basis.
On the other hand, Bank Nifty Futures gained about 2.50 percent as it closed the week around 42,197. Bank Nifty future gyrated between 42,230 to 40,866.
Further diving into the Nifty upcoming weekly expiry, Nifty immediate resistance stands at 18,000 levels where nearly 52.36 lakh shares is the OI of Call Option (CE); followed by vital resistance at 18,300 levels where about 37.09 lakh shares of CE options is the OI. On the lower side immediate support level is at 17,800 where nearly 46.16 lakh shares is the Put Option (PE) open interest followed by 17,300 where nearly 35.41 lakh shares 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 43,500 where nearly 15.63 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 41,000, about 15.25 lakh shares, which is the PE open interest.
India VIX, fear gauge, increased to 11.91 over a week-to-week basis from 11.80. Further, any uptick in VIX could accentuate the downward move in Nifty and vice versa.
Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.28 from 1.104. Bank Nifty OIPCR over the week increased to 1.336 from 0.846 compared to last Friday (April 14). 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 Auto contributed positively by +118.67 and +39.14 points respectively.
Pharma also contributed positively to Nifty by +12.12 points, NBFC and PSU Bank contributed positively to Nifty by about +32.51 and +4.91 points respectively. Power contributed by +3.38 points, and Telecom and Cement contributed positively to Nifty by +1.11 and +1.79 points respectively.
FMCG contributed positively to Nifty by +14.94 points, while IT and Capital Goods contributed negatively by -42.25 and -3.30 points respectively.
Looking towards the top gainer and loser stocks of the week in the F&O segment. AU Small Finance Bank topped by gaining over 19.40 percent, followed by Godrej Properties 13.60 percent, Divis Lab 8.7 percent. Whereas ABB lost -5.0 percent, Indus Tower has lost over -3.5 percent, and Petronet LNG lost -3.3 percent over the week.
The upcoming week can be approached with a low-risk strategy like modified Call Butterfly in Nifty.
This trade idea was published on 17 Apr 2023 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 17 Apr 2023: 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.