Trading Strategy: Here's how to trade Nifty on November 7; details inside

Nifty F&O cues: Short term trend of the Nifty remains weak as it is placed above its 11 and 20 day EMA.

Derivative Strategy for Nifty Trading - Nandish Shah, HDFC Securities

Bear Spread Strategy on Nifty 

 

Buy Nifty (18-November Expiry) 25500 Put at 144 & simultaneously sell 25300 Put at 82

 

• Lot Size 75
• Maximum Loss 4650 If Nifty closes at or above 25500 on November 18 expiry. 
• Maximum profit 10350 If Nifty closes at or below 25300 on November 18 expiry. 
• Breakeven Point 25438
• Risk Reward Ratio 1: 2.23
• Approx margin required Rs 38000

Rationale:

• Short build up is seen in the Nifty Futures during the November series now, where Open interest rose by 27 per cent along with price fall of 1.60 per cent 
• Short term trend of the Nifty remains weak as it is placed above its 11 and 20 day EMA. 
• Nifty open interest put call ratio fell to 0.77 levels from 0.93 levels on the back of call writing at 25700-25800 levels.

 

(Disclaimer: Nandish Shah is senior technical/derivative analyst at HDFC Securities.Views expressed are his own.)