Get App
Last Updated : Sep 10, 2019 10:54 AM IST | Source:

In neutral scenario, take advantage of Theta melting & make short strangle on rupee

In the next few days, traders should not expect major strength in the rupee as lower than expected GDP numbers will not let the currency appreciate much.

Moneycontrol Contributor @moneycontrolcom

Rudra Shares and Stock Brokers

USD/INR upside momentum seems to be abating and the currency pair looks ready for a consolidation phase. The highs of December 2018 were tested last week but the supply pressure pushed the prices back in the sideways zone. At present, the currency pair is trading in crucial zones, as per the Fibonacci retracement levels.

Considering the life-time high of 74.49 in October 2018 till the recent low of 68.28, the pair is trading at 61.8 percent retracement level, which is placed at 72.20. Prices failed to breach the level on closing basis and formed a shooting-star pattern on the weekly chart preceded by a big red candle. The pattern indicates a pause in an ongoing uptrend.


Image5992019USDINR DAILY

On the daily timeframe, there are a series of three red candles and negative divergence, indicating that the rupee could strengthen against the dollar. The RSI, trading in a bullish zone since August 2, is again in the sideways zone. The Average Directional Index is seen sloping downward and suggests that overbought prices are ready to settle down.


The trade war between the US and China is expected to provide stability to the currency pair, with both the countries heading back to the negotiation table. The improved sentiment will help the currency pair to stabilise before the next move. Crude prices have been steady and are unlikely to influence the rupee in the very short term.

Fundamental triggers are neutral for the currency pair for the week. But, technical setup is suggesting that we could see a sideways move, with the negative bias. Maximum dip could be seen at 71.3 to 71.1.

Traders should not expect major strength in the rupee in the next few days,  as lower than expected GDP numbers will not let the currency appreciate much in short term. Hence, 71.1 is a major hurdle.

We believe that traders should form a short strangle for September 13 contracts and go short in 72.25 CE and 71 PE at 0.0525 and 0.0325, respectively, to take advantage of sideways trend and Theta melting.

Note: The above option prices are taken from September 6 closing.

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.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Sep 10, 2019 10:54 am
Follow us on
Available On
PCI DSS Compliant