The document provides daily derivatives outlook and recommendations for option trades in the Indian market. It lists the highest call and put open interest strikes for various indices like Nifty, Bank Nifty and currency pairs like USD/INR. It recommends bullish and bearish call and put option trades based on the open interest data. It also provides notes on various option strategies like spreads, covered calls, protective puts and their risk-reward profiles.

1. Daily Derivatives Outlook
2 January 2013
Short Strangles & Straddles
Sell Calls & Sell Puts
Simultaneously Bullish Call Option Trades
Nifty( Jan, Feb, Mar)
Highest Call OI at 6000
Highest Put OI at 5800 Buy Canara Bank 520 CALL at 15
Equilibrium at 5950
Buy Allahabad Bank 180 CALL at 4.4
5900C & 5900P
6000C & 5800P Buy LIC Housing Finance 300 CALL at 9.5
6100C & 5700P
6200C & 5600P Buy Hindalco 140 CALL at 2.75
6300C & 5500P
6400C & 5400P Buy Hind Unilever 540 CALL at 9.5
Bank Nifty(Jan) Buy India Cement 95 CALL at 3.25
Highest Call OI at 13000
Highest Put OI at 12000 Buy Reliance Infra 560 CALL at 16.5
Equilibrium at 12500
12500C & 12500P
12700C & 12300P
Bearish Put Option Trades
12900C & 12100P
13100C & 12000P
13300C & 11900P
13500C & 11800P Buy NTPC 150 PUT at 1.5
USD/INR(Jan)
Highest Call OI at 55 Buy Power grid 110 PUT at 0.8
Highest Put OI at 55
Equilibrium at 55
55C & 55P Buy Hero Motor 1900 PUT at 43
55.25C& 54.75P
55.5C & 54.5P
55.75C & 54.25P
56C & 54P
56.25C & 53.75P
Keynote Capitals Ltd.
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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322

2. NOTES ON OPTION STRATEGIES :
1. Advantages of Options – Profit from Trading range Markets, High Leverage, Built-in
Stop Loss, Higher Probability of Profit using Spread Trades and Increase in trading
opportunities due to multiple legs.
2. Stop Loss : Use 50% stop loss for bought options and 100% stop loss for sold options.
3. Profit Taking : Book profits at 100% for bought options and 50% for sold options.
4. Put Call Ratio ( Open Interest) is bullish at levels between 0.8 to 1.2 and bearish
between 1.75 to 2.
5. Equilibrium strike is with equal Call and Put Open interest with Highest Call Open
interest strike as resistance and Highest Put Open interest as support.
6. Long Call and Long Put are Limited Risk and Unlimited Reward strategies.
7. Short Call and Short Put are Unlimited Risk and Limited Reward strategies.
8. Long Synthetic and Short Synthetic are Unlimited Risk and Unlimited Reward
strategies used instead of futures to save margin.
9. Long Straddle ,Long Strangle and Long Guts are long volatility strategies ahead of
events/results etc.
10. Short Straddle, Short Strangle and Short Guts are Short volatility strategies when
range-bound action is anticipated.
11. Protective Put and Protective Call protect futures positions by buying options.
12. Collar is a combination of the Covered Call and the Protective Put or the Covered Put
and the Protective Call.
13. Covered Call/Ratio Call Write Put and Covered Put/Ratio Put Write cover futures
positions by selling options. They involve unlimited risk and limited reward.
14. Bull Call Spread , Ratio Bull Call Spread and Bull Call Ladder are bullish debit spreads
which involve buying a lower call option and selling upper call options.
15. Bear Put Spread, Ratio Bear Spread and Bear Ladder are bearish debit spreads which
involve buying a upper Put option and selling a lower Put option.
16. Bull Put Spread is a bullish credit spread which involves selling a upper put option and
buying a lower put option.
17. Bear Call Spread is a bearish credit spread which involves selling a lower call option
and buying a upper call option.
18. Long Iron Butterfly is a combination of the Bull Put Spread and Bear Call Spread while
Short Iron Butterfly is a combination of the Bull Call Spread and Bear Put Spread.
19. Long Term Options can be used to create investment grade positions using spreads,
synthetics and covered /protective positions.
20. Calendar/Diagonal Calls is a debit spread involving buying a long-dated call option and
selling a short-dated call option against it ( Diagonal Calls involve different strikes).
21. Calendar/Diagonal Puts is a debit spread involves buying a long-dated put option and
selling a short-dated put option against it ( Diagonal Puts involve different strikes).
Keynote Capitals Ltd.
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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322

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