August 23, 2020


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.