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Through this explainer, Moneycontrol tries to make sense of what is happening out there in the derivatives market
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With this redemption the total outstanding amount will come down to Rs 2,378.73 crore, a gazette notification dated March 27, 2023, said.
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Bear Put spread is a moderately bearish strategy. The strategy is built by Buying a Put close to the current market price of the underlying and Selling the same expiry Put but of a strike lower than the Put bought.
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Modified Call Butterfly is a 4-legged strategy where 1 lot of Call close to current underlying level is bought against that 2 lots of higher strike calls.
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Considering the unpredictability of the pandemic, it makes sense to keep the trades limited and protected. Hence, Modified Butterfly on monthly series options is advised.
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The Back ratios are typically known for their pro-volatility characteristics. Here, we have a forecast that we could have a big move in a day or two.
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The best possible solution to go contra is to have a synthetic call in a place where one goes long on futures and buys a Put of a strike slightly lower than the current market price.
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Modified Put Butterfly is a 4-legged strategy where 1 lot of Put close to current underlying level is bought against that 2 lots of lower strike Puts are sold and 1 more lot of Put is bought but closer to the Put sold strike.
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Look at the credit rating, goodwill of the business group issuing the instrument and post-tax returns
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Higher premiums are attributed to higher implied volatility and lower premiums are attributed to lower implied volatility.
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Situations like these where there is strong consensus seem to have been built against the range breakouts, trading against the tide for that minor possibility of a very big move becomes very difficult
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Many houses are gearing up to use the strategy that lets the fund manager pocket some extra returns in range-bound markets.
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Traders are advised to remain focussed on stock specific opportunities with a market stop placed below 10,733 levels on closing basis.
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On the downside 10,628 for Nifty is important critical support. Traders are advised to remain positively biased as long as Nifty trades above 10,700 on a closing basis
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It is always profitable to know this kind of market neutral strategies as well, as one is capable of trading other than just unidirectional moves
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It is time to remain on sidelines and wait for a breakout above 10950 to go long and a breakdown below 10600 to go short on the index.
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The index has been making lower highs and lower lows which is not a strong sign for the bulls; hence, investors should tread cautiously in the next few days.
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Put options open interest is much higher than those on the call side suggesting a downward bias in the market.
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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
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Most of the times the cost of hedging wouldn’t go beyond 3-4% even if the hedge is kept for a good 20+ sessions. I have always found prudence in choosing the strike close to the current market price.
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Technically, the momentum is strongly favouring the bulls and traders are advised to buy a fresh breakout above 10990 kind of levels.
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The Nifty also managed to hold on to its crucial support placed at 10,900-10,950, which is a positive sign for the bulls.
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Bull Call Spread is a bullish strategy where we buy one lot of lower strike Call and sell 1 higher strike Call. It’s is a safe strategy to play long bias as maximum risk and reward are well defined.
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FIIs paused in their buying across key EMs. Outflows around $100 million were seen from Malaysia, South Korea, and Thailand. Taiwan and India saw outflows of almost $500 million each.
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On the options front, maximum Put OI is placed at 10,000 followed by 10,200 strikes while maximum Call OI is placed at 11,000 followed by 10,900 strikes.
