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Last Updated : Dec 31, 2018 07:44 AM IST | Source:

Difficult for Nifty to cross 11K, deploy low risk ‘Bear Put Spread': Shubham Agarwal

During the week, the Nifty made a low of 10,536 but recovered swiftly to come near the vicinity of its vital highest Call strike of 11,000

Moneycontrol Contributor @moneycontrolcom
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Todays L/H

Shubham Agarwal

Global turmoil, volatility in the USD-INR coupled with state election verdict saw alternate bouts of buying and selling in December series. After five months of over 6 percent (+/-) average move, December series ended on a flat note.

The Nifty closed 0.66 percent down at 10,783 while Bank Nifty closed 0.13 percent lower at 26,887. The Nifty saw a rollover of 73.8 percent with over 13.6 percent of an incremental open interest at beginning of January series while BankNifty saw a lower roll of 63.6 percent with the shedding of 41 percent OI at beginning of January series.


During the week, the Nifty made a low of 10,536 but recovered swiftly to come near the vicinity of its vital highest Call strike of 11,000. The Bank Nifty too recovered ~1000 points from the low of 26,400 to 27,300.

The Volatility Index has moved above 15 indicating market can continue to witness swings in January series. Reduction in OI has been seen across stocks as traders are reluctant to carry leverage position.

Long built up was seen in consumer goods (HUL, Bata India) and NBFCs (Muthoot Finance, Repco Home). Short built-up was seen in Textile (SRF, Arvind) and Pharma (Sun Pharma, Auro Pharma).

Private Banks like (Axis Bank, ICICI Bank, and RBL Bank) saw positive price action but a lower carryover of position to next series.

The Nifty options data for the January series shows 10,500 as distant support. Congestion in between is too sparse to pay attention.

On the other hand, ~2.5 million shares in 11,000 Call & Put could make it difficult to run away beyond 11,000. Thus a low-risk hedge strategy Bear Put spread in Nifty could be deployed.

Strategy 1

Strategy 2

Strategy 3

Bear Put Spread is a Bearish strategy where we buy 1 lot of ATM Put and sell 1 lot of lower strike Put. The maximum loss is limited to net premium outflow on the higher end. Profit is maximum to the difference in strike less the net outflow.

The author is CEO & Head of Research at Quantsapp Private Limited.

Disclaimer: The views and investment tips expressed by investment expert on are his own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

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First Published on Dec 31, 2018 07:44 am
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