Bull Market: Weekly Options Strategy: Keep target at 16,000-16,200, ride the bull ladder

Critical position

Purchased July 7, 15800 Call 141; Sell ​​July 7, 16000 Call at 64.5 and Sell July 7, 16200 Call at 20.5 (Each lot 1 lot).

Theoretical basis

The Nifty still muted last week despite quarterly and monthly settlement and after the test series VWAP near 15900, it dropped below 15700 level. The sell-off that emerged among oil and gas companies due to a policy change was the main reason behind Friday’s drop. However, the broad markets performed relatively better and closed the week in the green.

Going forward, considering the upcoming quarterly results, a short sell can be expected and Nifty is likely to hit 16,000 in the coming sessions.

Are from data point of viewCall Open Interest for the upcoming weekly payout is visible at 16,000 strike while the Place Order facility is located at ATM point 15600. Therefore, the positive trend will continue until Nifty sustains above 15,600 levels and it might attempt towards 15900/16000 in the coming sessions.

From a rotation point of view, the FII’s net shorts are largely intact and positions are carried over to the July series as the index futures net shorts still exceed 10,000 contracts. On the other hand, the net length in the stock futures contract remains higher indicating a specific accumulation of the stock.

Keeping the target between 16,000 and 16,200, we feel traders can Ladder calling for cows strategy in which maximum profit will be made between 16,000 and 16200. However, one needs to be careful on the higher side as well as the strategy will start losing if Nifty moves above 16350 in the current trade in.

Traders will profit if the Nifty remains or expires between 15,850 and 16,350.

Pay-Off Diagram:

Refund scheme1Organ

(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These recommendations do not represent the views of The Economic Times)

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