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)
India VIX decreased to 11.13 over a week-to-week basis from 11.90.
Nifty Future closes the week around 18,633, gaining about 0.32%. During the week, Nifty gyrated between 18,742 and 18,550. On the OI (open interest) 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 June Futures closed flat for the week around 44,074 and gyrated between 44,525 and 43,861. Overall, Bank Nifty ended the week flat.
Further diving into the upcoming weekly expiry, Nifty’s immediate resistance stands at 18,700 levels where nearly 62.51 lakh shares is the open interest of CE options, followed by a vital resistance at 18,800 levels where about 60.83 lakh shares of CE options is the open interest. On the lower side, immediate support level is at 18,500 where nearly 102.21 lakh shares is the PE options open interest followed by 18,000, where nearly 44.12 lakh shares is the PE options open interest. There is a substantial OI at 19,500 CE of about 106.35 lakh shares and also at 18,600 CE of about 103.56 lakh shares.
Looking at the Bank Nifty upcoming weekly expiry data; on the upside, Bank Nifty immediate and vital resistance is at 44,500 where nearly 23.44 lakh shares is the CE open interest, whereas, on the lower side immediate and vital support is at 43,500, about 16.76 lakh shares, which is the PE open interest. There is a substantial OI at 44,000 CE and PE of 50.66 lakh and 33.27 lakh shares respectively.
India VIX, fear gauge, decreased to 11.13 over a week-to-week basis from 11.90. 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 0.953 from 1.367. Bank Nifty OIPCR over the week decreased to 0.799 from 1.185 compared to last Friday. Overall data indicates PE writers were less aggressive than CE writers in Nifty.
Moving further to the weekly contribution of sectors to Nifty; auto and FMCG contributed positively by +26.88 and +64.95 points, respectively. Oil & Gas contributed negatively to Nifty by -50.60 points. Private Bank and Power contributed negatively to Nifty by about -25.37 and -7.46 points, respectively. Capital Goods contributed positively to Nifty by +4.45 points. NBFC, PSU Bank and Pharma contributed positively to Nifty by +8.49, +9.86 and +12.19 points, respectively.
Looking towards the top gainer & loser stocks of the week in the F&O segment, RBL BANK topped by gaining over 14.10%, followed by India Cements 13.40% and PFC 12.10%. Meanwhile, City Union Bank lost -11.40%, GMR Infra lost over -8.50%, and Balkrishna Industries lost -5.90% 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 5 Jun 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 5 Jun 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.