Moneycontrol
Nov 10, 2012 03:28 PM IST | Source: CNBC-TV18

F&O market: ICICI Sec's strategy on Dr Reddy's, Bajaj Auto

The Indian market has been resilient and rangebound over the last few sessions. In an interview to CNBC-TV18, Amit Gupta of ICICI Securities says, right now, the Nifty option premiums are quite subdued.


The Indian market has been resilient and rangebound over the last few sessions. In an interview to CNBC-TV18, Amit Gupta of ICICI Securities says, right now, the Nifty option premiums are quite subdued.


He is recommending his clients a short strangle strategy in the month of December. “We feel that the option writers, which were quite aggressive in the current month, are writing the options of the next month. This is why the market is stuck-up in a range. I think it is better, if we start writing December options now to utilise this particular move of the market,” he elaborates. 


Dr. Reddy’s Laboratories, he says, has moved from Rs 1,700 to Rs 1,760 in the last one-and-a-half month, but the open interest has declined by almost 24 percent. “That gives me a sense that the shorts are slowly exiting from the stock. We can see further short covering in the coming sessions,” he adds.


Bajaj Auto, he says, has been trading near the lifetime highs, but the best part in the stock is that the open interest has not been very heavy. “If look at the last one-and-a-half month, the open interest has remained flat. That gives me a sense that there is a lot of move possible in Bajaj Auto from the current levels. My target for the stock is Rs 1,920,” he asserts.

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