Deploy modified put butterfly strategy 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)
The Nifty closed the week ended February 10 around 17,870, roughly flat. The index gyrated between 17,974 and 17,703 during the week. On the OI (open interest) front, marginal short built-up was seen in Nifty Jan Futures over the week gone by as there was an increase in OI, with a marginal drop in the Nifty weekly closing basis.
On the other hand, Bank Nifty Jan Futures gained about 0.02 percent as it closed the week around 41,645. Bank Nifty futures gyrated between 41,921 and 41,242 in the last week. Overall, the index ended the week with marginal gain.
Further diving into the Nifty upcoming weekly expiry, Nifty immediate resistance stands at 18,000 levels where nearly 67.16 lakh shares is the open interest followed by vital resistance at 18,500 levels where about 49.75 lakh shares is the open interest.
On the lower side, immediate support level is at 17800 where nearly 68.85 lakh shares is the PE options open interest followed by 17,500 where nearly 33.46 lakh shares is the PE options open interest.
Looking at the Bank Nifty upcoming weekly expiry data, on the upside, the immediate and vital resistance is at 42,000 where nearly 18.46 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 41,500, about 28.68 lakh shares, which is the PE open interest. At 41,000 about 15.57 lakh shares of PE open interest is present.
India VIX, fear gauge, decreased to 12.77 over a week-to-week basis from 14.40. It has been around the lows, declined again. Further, any uptick in INDIA VIX could start the downward move in Nifty and vice versa.
Looking at the sentimental indicator, Nifty OI PCR for the week has decreased to 1.051 from 1.165. Bank Nifty OIPCR over the week decreased to 0.867 from 1.032 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. NBFC contributed 39.45 points positively to Nifty. IT and Infra were positive contributors to Nifty, with 8.79 and 17.48 points respectively.
Private Bank and Metal contributed -33.20 & -33.67 points negatively to Nifty. Power contributed 0.70 points to Nifty on the positive end.
Telecom contributed negatively to Nifty by -17.10 points, FMCG by -34 points and auto by -19.32 points.
Looking towards the top gainer & loser stocks of the week in the F&O segment. Adani Enterprises topped by gaining over 17.3%, followed by Adani Ports 17.1%, Indus Towers 16.5%. Whereas Tata Steel lost -9.3%, UBL has lost over -6.7%, MCX lost -6.3 % over the week.
The upcoming week can be approached with a low-risk strategy like modified Put Butterfly in Nifty.
This trade idea was published on 13 Feb 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 13 Feb 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.