Buy 3rd June 35,600 Call strike at 415-420 ;
Sell 3rd June 35,600 Put strike at 420-430;
Target: 350; Stop loss: 1050 (1 Lot Each)
Rationale
Bank Nifty rollover was in line with its 3 months average whereas few stocks like
and which saw good amount of short addition in May series has witnessed closure. We believe the current leg of short coverings in few private banks should continue.
Bank Nifty has started the June series with an optimistic note. Sizeable Call OI base is placed at 35500 strike and the index has managed to give a weekly close above this level which is a positive sign. Major Call OI concentration has moved higher to 36500 strike which should be looked at as maximum upsides in the current week expiry.
As we are keeping our view consolidation hence we advise traders to go for a short straddle option strategy. It is a 2-leg option strategy and consists of selling ATM strikes of Calland Put options.
We feel a 1,000-point range bound session cannot be ruled out in the coming days after the 2000 points of rally witnessed in the last two weeks, we feel traders can go for a short straddle of ATM 35600 strike where profit will be made within the range of34700 to 36500. However, one needs to be careful on both sides also as strategy will start making loss if Bank Nifty moves above or below to the given range.
Traders will be in maximum profit if Bank Nifty closes near 35600 levels on 3rd June expiry.
(The author, Raj Deepak Singh is Analyst – F&O, Currency, and Commodities, ICICIdirect)
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
