August 23, 2020

NIFTY WEEKLY OVERVIEW OF 27TH AUGUST 2020 EXPIRY

By Roy

Nifty failed to cross 11400 with conviction. At upper levels, it experienced selling pressure. Market participants have earmarked a certain level for Nifty, beyond which there is a supply zone. But in my view, this week Nifty will trade with a neutral to positive bias. My strategy for last week to sell 11600 call option on the upside and 10700 put option on the downside played down well. It yielded a weekly return of 1.60%.

You can go through my previous week’s post here. After this week I will post my monthly summary.

Now let us workout this week’s expiry.

Nifty Daily:

As I mentioned earlier, the bias in the Nifty is positive. An upward trending channel gives it a strong support and the Global market is having continuous rally which is trickling down to the domestic mood as well. We have to keep in mind that this is a monthly expiry week and there may be aggressive rollovers due to which market can get volatile at times. Vix closed at 19.94 on Friday which signals at market hysteria. I am expecting a rise in volatility this week.

Bank Nifty is lacking strength. It has formed a trading channel and trading well within that range. SBI is struggling to cross that sacred 200 level. HDFC bank failing to provide the follow-through. For any upthrust or breakdown, BNF has to break that 21000 to 23250 range.

Nifty IT:

The IT pack seems to be getting lethargic. 18400 looks like that sacrosanct level which acting as a strong resistance for Nifty IT. Till the index breaches that mark, no follow-through buying can be seen. I am afraid, after that one-sided rally, Nifty IT looks vulnerable for short term price correction.

Nifty Metal:

Yes. Metal is shining and I expect the shine to continue further. It crossed a major hurdle of 2450 and poised to travel northwards. I am bullish in metals for the long term.

Weekly Expiry Strategy:

I have sold 11000 Put option of Nifty at 13.50 and Sold 11700 Call option of Nifty at 6.20. Both for the 27th August 2020 expiry. I sold this strangle on Friday. Due to low implied volatility, premium was less, but I will stick to my strategy.

 

 

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.