Option Strategy - Reliance

Strategy – Short Strangle

This strategy is for the stock Reliance Industries; we expect the stock to remain in a range of 920 -1020 for most part of February month. We see the current downside in the stock to get arrested at 900/920 levels and a bounce back is expected after that. Option data also suggest that there is a good amount of open interest build up seen in 940 put and 1020 call.  We recommend a Short Strangle where one needs to Short 940 put at Rs 21 and simultaneously Short 1020 call at Rs 13 and gets total premium of 34 Rs.

Breakeven Points:

Upper Breakeven Point:               1054

Lower Breakeven Point :              906

It means loss only starts if Reliance goes above 1054 or below 906 levels in the month of February

Risk/Reward:

Max Profit:         8500/-

Max Loss:            Unlimited

Investment:       76000 ( Margin of 2 lots  of Reliance Inds )

RETURNS:            Upto 11.18%

                                Upto 134 % ( ANNUALIZED )

                                                                                     

Thats what you call a v-shape chart... We again were bang on target, Nifty bounced back 120 points from our support zone 5690-5720

Stock View: HDFC

Buy Hdfc @ current levels of 660-665 and add if it dips to 650-652 with stoploss of 640 on closing basis and targets 700/720 in short term..

Have a nice trading day

Regards

Ankit

Nifty detailed View updated

 
Nifty View:

Nifty after correcting 8% in last few days has send shivers down the spine for investors as well as traders. Now talking about when it will bounce back?? The answer is that it should bounce back from 5690-5720 ( we all know - the last 2 bottoms ) . But if it sustains/closes below the above said range then u can expect a 150-200 point cut which would take it to Multiple support rectangle -- 5550- 5650.

Multiple Support Rectangle consists of:
1) 200 DEMA -- Green Line - if u check the chart, 200 dema has taken care of the last 2 bottoms made in Feb and May in 2010.
2) 200 DMA -- Orange Line
3) Last top made on the channel @ 5550 ... This was the last top made before we started the massive rally from 5400 to 6000 levels

The bounce back is likely to take place from Multiple Support Rectangle if last low @ 5700 is broken.

Have a nice trading day

Regards

Ankit

Nifty has finally given a confirmation of the breakout by closing above 6050 on weekly basis..Traders/Investors can use dips to 6050-6030 to buy.

 
Stock View: IGL

The stock has been rangebound between 300-350 odd levels since past few months. With stock having tested 350 odd level 4 times before may finally give a breakout this time with supporting vols and a convergence on the charts. Buy IGL at current levels of 340-345 ( safe traders buy only above 348-450) and add on dips to 330-335 with stoploss of 320 on closing basis and targets 390/410 in short term.

Have a nice trading day

Regards

Ankit