1) Nifty has shown some remarkable progress in the last few sessions, despite adverse economic conditions in Indian economy as RBI tighten noose on financial system to protect currency.
2) Nifty, if corrects from the levels of 6080-6110 on closing basis and breaks 5950 on the downside, can actually then correct further down to 5550-5650 levels as this will confirm the heads & shoulders pattern made by the index (See chart below)
3) Though on the upside, if is able to breach 6190-6210, then can actually move further up to make new highs around 6400-6450. The break out above 6190 is very crucial as this is where the last top has been formed (See Chart below)
4) Amidst such environment, it is advised to buy a bull spread and bear spread strategy for the August series and wait for a breakout till 10th August.
5) Buy 5900 Put and Sell 5600 Put which gives a net outflow of 40 Rs and similarly, Buy 6300 Call and Sell 6500 Call for August series, again leading to net outflow of Rs. 30. The combined net outflow is Rs. 70 which translates to maximum loss of Rs. 3500.
6) If it corrects, one may exit the bear spread strategy when Nifty reaches 5750. On the inverse, it is goes up, one may exit from bull spread strategy, if Nifty reaches 6420.
No comments:
Post a Comment