The previous day's market movements both in the cash as well as the derivatives market serve as an indicator of how the markets are likely to open on the following day, says Nirmal Bang research report.
As we entered 2013, everyone expected Nifty to cross the highs far above 6000. Today the Nifty crawled back to the 6,000-mark. In an interview to CNBC-TV18, Amit Gupta of ICICI Direct said that we are into consolidation before making an upmove towards 6,100-6,150 levels.
With an anticipation of further up-move in the October expiry, we recommend traders to construct a Bull Call spread on the Nifty. It can be initiated by "buying a 5,800 Call and selling a 6,000 Call of the October series".
Long Straddle on Nifty: It can be initiated by buying 5200CE and 5200PE of August series. The net combined premium outflow comes around Rs 180, which is also the maximum loss. The break-even stands at 5380-5020 levels. There is unlimited profit beyond the break-even range.
Short Strangle on Nifty: It can be initiated by selling 5300 Call and 5100 Put of July series. The net premium inflow comes around Rs 45-50, which is also the maximum profit if the Nifty July series expires between 5100-5300. The loss remains unlimited beyond the break-even range of 5350-5050.
First thing which a new trader should keep in mind while in derivatives trading is that leverage can work against you. Other basic concept which they need to know is like unlike equity shares, FNO instruments comes which maturity date
Put call Ratio (PCR)- It is known as the contrarian indicator. If the Nifty‘s current month OI PCR is in the range of 0.7 to 1.0, it indicates the bearish signal and the market seems to be in oversold zone due to which short term bounce back is expected.
The Nifty Futures traded in a tight range of 5,330-5,190 (as on 13th April) with a positive bias in the first half of April expiry.
The Indian stock market continued its upward trend in the February series with the Nifty gaining around 7% in the February expiry series, says Nirmal Bang's Beyond Market report.
The Nifty bounced back in the January expiry, led by banking, metals and auto sectors. It gained over 5% (CMP: 4866) in the first half of the January expiry.