The most important thing is taking a view and riding with options strategy is the breakeven level. Faster the breakeven levels better the odds of risk-reward ratio. Diagonal Spreads has a faster breakeven with controlled risk and limited reward.
Bullish Diagonal Call spread is neutral to a bullish strategy which is executed by buying long-dated in the money call option and concurrently selling short-dated out of the money call option. It is a synthetic replication of a covered call strategy.
There are a lot many bullish strategies out there where one can follow when Nifty is falling. However, one particular strategy makes me more interested from a risk-reward perspective. It is a three-legged strategy that can be executed if you know the clear support zones in Nifty.
Still, Nifty Futures is struggling to find its direction for this month. So far in this series, Nifty went down 10552 levels and no supportive active from the sellers and the price manage to move to the other side of the consolidation band 10800 levels. No supportive action from the buyers at 10800 levels price again rotated towards the center of the consolidation band 10560 – 10800.
Nifty found short term resistance around 10500 zone and currently in the phase of short term correction. Trading sentiment and profile sentiment both turned to negative mode which brings more downside pressure for nifty in the very near term. On the downside 10350 and 10248 are the two major focus levels to watch in the very short term.
If you are a professional future trader in the markets then transaction cost plays a major role while trading. Lower the transaction cost translates to better returns and also reduces the risk to greater extent in the long run. By constructing a Synthetic Futures (Long/Short) we can reduce the total transaction cost by two-third of the actual instead of trading the futures.
Nifty and Bank Nifty weekly sentiment maintains positive despite weakness in the market. Last week DII continued their relentless buying mode despite weakness in the market and with the continue FII selling pressure. US Market (S&P500) closed with marginal weekly gains with a surprising fierce up move on the friday trading session. India VIX continued its downtrend despite weakness in the market which indicates lack of fear in the market at this point.
The recent move in Nifty Futures are clearly driven by Short term players. Nifty Futures positive sentiment continues however sooner or later we can expect the trend to reverse when the sentiment gets over heated. Bank Nifty is showing divergence as the sentiment turns negative and continues to underperform Nifty Futures.
It is interesting to note that DII’s are relentlessly buying the equity market right from 12th June 2015 despite Greece Exit fears, Global Meltdown and Indian Market seems to be resilient to such macro events. Monday panic gap down in Nifty Index countered by late session rally on both monday and tuesday.
Trador is a option analytics tool for Indian Traders and do also provide for United States, Canada Stock and Index Option analytics. It is friendly, simple where one can build option strategies very easily. Moreover it is alternative to Options Oracle software as these days Options Oracle stopped supporting and the Options Oracle working solution is not working in many desktops.
The Nifty Futures and Bank Nifty Futures continued to move up last week, gaining 2.2% and 1.0% respectively on close. And Bank Nifty is relatively under-performing in the recent uptrend. However this may so far foreign investors are relentlessly selling in equity market and Debt Market and had pulled out more than Rs 14,000 crore. The Outflow of Debt Market is far steeper than Equity Market.
Nifty and Bank Nifty futures is in downtrend in most of its timeframe. Last week Nifty closed above 5EMA(high) but the subsequent week closed below 5EMA(high) however bank nifty futures is not able to close above 5EMA(high) in the last week and still continuing its long term downtrend.