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)
During last week, Nifty Future gyrated between 17854 - 17583
Shubham Agarwal
Nifty Future closes the week, around 17,651, losing about -1.28 percent and during the week, it gyrated between 17854 - 17583. On the OI (open interest) front, short built-up was witnessed in Nifty Futures over the week gone by as there was an increase in OI, with losses witnessed on the Nifty weekly closing basis.
On the other hand, Bank Nifty Futures dropped about -0.15 percent as it closed the week around 42,128. Bank Nifty’s future gyrated between 42,639 to 41,858, the last week. Overall, Bank Nifty ended the week with a minor loss.
Further diving into the Nifty’s upcoming expiry, Nifty immediate resistance stands at 17,700 levels where nearly 162.72 lakh shares is the open interest of CE options followed by vital resistance at 18,000 levels where about 79.39 lakh shares of CE options is the open interest. On the lower side, the immediate support level is at 17,600 where nearly 80.37 lakh shares is the PE options open interest followed by 17,000 where nearly 97.07 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 42,500 where nearly 33.89 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 42,000, about 32.70 lakh shares, which is the PE open interest.
India VIX, fear gauge, decreased to 11.63 over a week-to-week basis from 11.91. Further, any uptick in India VIX could accentuate the downward move in Nifty and vice versa.
Looking at the sentimental indicator, Nifty OI PCR for the week has decreased to 0.93 from 1.28. Bank Nifty OIPCR over the week decreased to 0.785 from 1.336 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, FMCG and PSUB contributed positively by +26.04 and +0.27 points respectively. Auto also contributed positively to Nifty by marginal +0.27 points.
IT and Private banks contributed negatively to Nifty by about -165 and -31.32 points respectively. NBFC and Cement contributed negatively to Nifty by -20.45 and -11.50 points respectively. Capital Goods contributed negatively to Nifty by -13.16 points.
Looking towards the top gainer & loser stocks of the week in the F&O segment, Bandhan Bank topped by gaining over 7.50 percent, followed by HPCL up 7.40 percent and Vodafone Idea up 6.6 percent. On the other hand, Infosys lost -11.5 percent, LTIMindree lost over -10.2 percent and Tata Chemicals lost -8.4 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 24 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 24 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.