1. Daily Derivatives Outlook
8 January 2013
Nifty( Jan, Feb, Mar)
Highest Call OI at 6200 Nifty and Bank Nifty Directional Option
Highest Put OI at 5800 Trades
Equilibrium and Short Straddle at 6000
Narrow Short Strangles
6100C & 5900P
6200C & 5800P
Buy Nifty 6000 PUT at 65 SL 32
Wide Short Strangles
6300C & 5700P Buy Bank Nifty 12600 PUT at 122 SL 61
6400C & 5600P
6500C & 5500P
Bank Nifty(Jan)
Highest Call OI at 13000
Highest Put OI at 12000
Equilibrium and Short Straddle at Directional Stock Option Trades
12800
Narrow Short Strangles
Buy IFCI 40 CALL at 2.2
13000C & 12600P
13200C & 12400P
Buy Maruti 1600 CALL at 38
Wide Short Strangles
13400C & 12200P Buy SAIL 105 CALL at 2.45
13500C & 12100P
13600C & 12000P Buy HPCL 340 CALL at 6.85
USD/INR(Jan)
Buy RCOM 85 CALL at 2.9
Highest Call OI at 55
Highest Put OI at 55 Buy JP Associate 95 PUT at 1.65
Equilibrium and Short Straddle at
55.25 Buy REC 260 PUT at 9
Narrow Short Strangles
55.5C& 55P Buy LT 1550 PUT at 17
55.75C & 54.75P
Wide Short Strangles Buy Hind Unilever 520 PUT at 6.5
56C & 54.5P
Buy Tata Motors 300 PUT at 3.4
56.25C & 54.25P
56.5C & 54P
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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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322