August 30, 2020

NIFTY WEEKLY OVERVIEW OF 3rd SEPTEMBER 2020 EXPIRY

By Roy

Last week I mentioned that the bias of Nifty is positive. Boy oh boy, what a rally it was. Nifty took the support of the trendline and just kept moving up. My strategy to sell Nifty 11000 put and 11700 call yielded me a return of 1.21%. My monthly strangle result:

Weekly Expiry Call Strike Premium Put Strike Premium Return
6th August 10650 15.00 11500 11.00 1.60%
13th August 10700 10.00 11500 15.90 1.59%
20th August 10700 18.60 11600 7.35 1.60%
27th August 11000 13.50 11700 6.20 1.21%
TOTAL 6.00%

Generated 6% of my capital. You can go through my previous week’s post here.

Now let us look at the upcoming weekly expiry.

Nifty Daily:

The bias is still positive. The upper trendline channel is giving support to the rally. A beautiful story is panning out in Nifty. The Nifty rally started by Auto, IT and Pharma companies. Then the Metals took over. Now, when they have exhausted, the big boy joined in. The big boy, the Bank Nifty just got over the major resistance line and looks poised for a major upswing. Bank Nifty is like Rohit Sharma, when he performs, he can score those big hundreds and can win you a match on his own.

India Vix closed at 18.34. Nifty is trading at PE of 33. But PE is reciprocal of Bond Yield. Globally yields are languishing at the bottom, so the spare money has to be invested somewhere. That is why equity is enjoying such rich valuations. Don’t fight with the price should be the first principle in the market.

Bank Nifty:

Bank Nifty pierced through the major resistance of 23250 and did not look back since. 25100 looks like the next probable resistance being the 200 DMA. Bank Nifty still has got enough legs and headroom to move upwards. SBI crossed the major resistance and looking way up. Kotak Mahindra Bank has just gone through its 200 DMA. To be precise, Bank Nifty is looking bullish.

USD-INR:

USD is getting weaker against India Rupee. Fed is not looking to ramp up the rates anytime soon and this factor is playing out in weakening the US Dollar.

Nifty Auto:

The next major resistance for Nifty Auto will be 8400. It formed a beautiful upward trendline on weekly charts. If it manages to cross 8400, then the next resistance will be 9200 which is 200DMA.

Weekly Expiry Strategy:

I have sold 11200 Put option of Nifty at 12.50 and Sold 12000 Call option of Nifty at 6.00. Both for the 3rd September 2020 expiry. I sold this strangle on Friday. Due to low implied volatility, the premium was less, but I will stick to my strategy.

 

Update on 31.08.2020 – Due to violent down move I had to make some adjustments in my positions. I created a spread out of the put side and sold higher strike calls. I bought 11000 PE at 13 and sold 11950 CE at 8. Put buy will hedge any further downside risk.

Disclaimer: This is not a buy or sell recommendation. I am not a SEBI registered advisor. I sell options and quite aware of the risk associated with it. I have kept surplus funds for any adjustment that may be needed due to evolving market conditions. This post is only information, not a recommendation.