The document provides a daily derivatives outlook and recommendations. It discusses short strangle and straddle trades on the Nifty, Bank Nifty and USD/INR based on the highest call and put open interest levels. It also recommends bullish and bearish option trades on various stocks. The notes section describes various option strategies like long and short straddles, spreads, synthetics and their risk-reward profiles.

1. Daily Derivatives Outlook
11 December 2012
Short Strangles& Straddles
Sell Calls & Sell Puts
Simultaneously
Nifty( Dec, Jan, Feb)
Highest Call OI at 6000 Bullish Call Option Trades
Highest Put OI at 5800
Equilibrium at 5900
5900C & 5900P
Buy Union Bank 260 CALL at 10
6000C & 5800P
Buy IDBI 115 CALL at 3.4
6100C & 5700P
6200C & 5600P Buy RCOM 80 CALL at 2.3
6300C & 5500P
6400C & 5400P Buy Karnataka Bank 200 CALL at 12.15
6500C & 5300P
Buy Jubilant Food 1350 CALL at 38
Bank Nifty(Dec)
Highest Call OI at 12500 Buy Tata Global 180 CALL at 3.7
Highest Put OI at 11500
Equilibrium at 12400 Buy Raymond 500 CALL at 11
12400C & 12400P
12600C & 12200P
Bearish Put Option Trades
12800C & 12000P
13000C & 11800P
13200C & 11600P
Buy TCS 1200 PUT at 8.3
13400C & 11400P
USD/INR(Dec) Buy Bharti Airtel 320 PUT at 8.8
Highest Call OI at 54
Buy BHEL 240 PUT at 5.4
Highest Put OI at 54
Equilibrium at 54.5 Buy BPCL 340 PUT at 2
54.5C & 54.5P
Buy Cairn 320 PUT at 2.4
54.75C& 54.25P
55C & 54P
55.25C & 53.75P
55.5C & 53.5P
55.75C & 53.25P
56C & 53P
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 (+C) and Long Put (+P) (OTM, ATM and ITM) are Limited Risk and Unlimited
Reward strategies.
7. Short Call (-C) and Short Put (-P) (OTM, ATM and ITM) are Unlimited Risk and Limited
Reward strategies.
8. Long Synthetic (+C-P) and Short Synthetic (+P-C) (OTM, ATM and ITM) are Unimited
Risk and Unlimited Reward strategies used instead of futures to save margin. They are
useful during expiry week and for long dated options.
9. Long Straddle(ATM +C+P), Long Strangle(OTM +C + P) and Long Guts(ITM +C+P) are
long volatility strategies ahead of events/results etc.
10. Short Straddle(ATM –C-P), Long Strangle(OTM -C - P) and Long Guts(ITM –C-P) are
Short volatility strategies when range-bound action is anticipated.
11. Protective Put (+F+P OTM, ATM, ITM) and Protective Call(-F+C OTM, ATM, ITM)
protect futures positions by buying options. They involve limited risk and unlimited
reward.
12. Covered Call/Ratio Call Write Put (+F-C or -2C OTM, ATM, ITM) and Covered Put/Ratio
Put Write (-F-P or -2P OTM, ATM, ITM) cover futures positions by selling options. They
involve unlimited risk and limited reward.
13. Bull Spread (+C-C), Ratio Bull Spread (+C-2C) and Bull Ladder(+C-C-C) involve buying
a lower call option and selling upper call options.
14. Bear Spread (+P-P), Ratio Bear Spread(+P-2P) and Bear Ladder(+P-P-P) involve
buying a upper Put option and selling a lower Put option.
15. Long Term Options can be used to create investment grade positions using spreads,
synthetics and covered /protective positions.
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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