Deploy modified Put Butterfly in Nifty
The upcoming week can be approached with a low-risk strategy like modified Put Butterfly in Nifty.
Research by Quantsapp Advisory, SEBI-registered research analyst (Reg. No. INH000006332)
Nifty immediate resistance stands at 18400 levels where nearly 79.14 lakh shares is the open interest of CE options
Shubham Agarwal
Nifty closes the week around 18,231, losing about -0.56 percent. During the week, Nifty gyrated between 18,473 - 18,084. On the OI (open interest) front, marginal short built-up was witnessed in Nifty Futures over the week gone by as there was an increase in OI, with losses witnessed in Nifty.
On the other hand, Bank Nifty May Futures gained about 0.53 percent as it closed the week around 43,990. Bank Nifty future gyrated between 44,115 to 43,465, the last week. Overall, Bank Nifty ended the week with gains.
Further diving into Nifty’s upcoming weekly expiry, Nifty’s immediate resistance stands at 18,400 levels where nearly 79.14 lakh shares is the open interest of CE options followed by vital resistance at 18,500 levels where about 79.10 lakh shares of CE options is the open interest.
On the lower side, the immediate support level is at 18,200 where nearly 80.60 lakh shares are the PE options open interest followed by 18,000 where nearly 76.70 lakh shares is the PE options open interest.
Looking at the Bank Nifty’s upcoming weekly expiry data, on the upside, Bank Nifty’s immediate and vital resistance is at 44,000 where nearly 32.05 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 43,500, about 25.30 lakh shares, which is the PE open interest.
India VIX, fear gauge, decreased to 12.30 over a week-to-week basis from 12.85. Further, any sharp 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 1.009 from 1.287. Bank Nifty OIPCR over the week decreased to 1.15 from 1.286 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, Private Bank and Information Technology contributed positively by +10.12 and +9.76 points respectively. Oil & Gas and FMCG contributed negatively to Nifty by about -32.76 and -19.67 points, respectively.
Metal and Capital Goods contributed negatively to Nifty by -6.66 and -10.28 points, respectively. Pharma contributed negatively to Nifty by -21.31 points and NBFC contributed negatively by -13.47 points to Nifty.
Looking towards the top gainer & loser stocks of the week in the F&O segment. Ramco Cements topped by gaining over 9.50 percent, followed by Birlasoft 8.20 percent, DLF 7.80 percent. Whereas Metropolis lost 9.90 percent, Jindal Steel lost over 9.0 percent, Divis Lab lost 6.80 percent over the week.
The upcoming week can be approached with a low-risk strategy like a modified Put Butterfly in Nifty.
This trade idea was published on 22 May 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 22 May 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.