Analysis and Trade Plan - 13 November 2019

  • Monday, I continued with my Iron Fly strategy on Nifty. It is running good but the time decay is slow. I am currently gaining 10 points from it. So I am thinking of replacing it with something else if it gives me 20 points today.

  • My outlook for Nifty was to hover around 11900. So when Nifty touched 11850, I executed a 11750, 11650 put spread and sold 12050 call simultaneously. I gained little profit here.

  • At around 2:30 pm, I went long on Bank Nifty with a calendar of 30600 Put and 30000 Put of next week. To hedge it further I sold 31600 calls in half quantity. Bank Nifty shot abruptly then and there giving me a minor loss. I covered it and again sold 30700 put and bough 30500 put along with a sold 31800 call.

  • We have been squeezing for long so I am expecting a break to either side today or tomorrow and I want to position my trades accordingly.

  • 31700 seems a real possibility for Bank Nifty.

  • Nifty futures witnessed long unwinding.

  • On daily charts we are bullish but on 2 hour and 30 minutes chart we are sideways and consolidating. Given the strength in Bank Nifty, we can start moving up in few days.

  • Max Pain at 11900 is steady with PCR at 0.89 hinting at sideways bias.

  • We have been squeezing for long so I am expecting a break to either side today or tomorrow and I want to position my trades accordingly. n at 12000, 12050, 12100 levels. 12000 is still the strike with highest OI. ITM calls were also written at 11850 and 11900 which also suggests that 11900 straddles might have been written.

  • On monthly options, puts at 11900 and 1200 were unwinded with addition at 11800. Calls were written at 11800, 11900, 12000 in small to significant quantity. So monthly and weekly data are little in alignment that we may have sideways movement for now.

  • One thing worth noting is that 12000 has the max OI of 25 lakh while other call strikes has less OI of 13 to 17 lakh while on Put Side, 11800 to 11900 has an OI of 19 to 17 lakh each. So if things get bullish, put writing can be severe as it can be a precursor to bullish positions being added by market makers.

  • Bank Nifty witnessed long buildup.

  • PCR at 1.73 and max pain moving up to 30800 hinting at a positive bias.

  • From 30500 to 31000, we witnessed huge put writing. Call writing was only there post 31500.

  • On monthly options, 30500 and 31000 put added huge OI so that can act as a strong support.

  • So Nifty can get bullish and Bank Nifty is already bullish so that is how I need to position my self.

Rohit Katwal

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