However, the monthly VWAP has found support at its monthly VWAP levels, which are located at 24,884, so it is currently trading within the 5-day and 20-day VWAP levels, making 25,030 to 24,880 the immediate range.
“Now, the index has reversed from the 61.8% retracement level of the fall from 25,333 to 24,753, so now on the upside, 25,131 is a clear resistance and above that, 25,200, which is the resistance of the downtrend line. Hence, the recent bounce has occurred from the 38.2% retracement level of the previous rise i.e. from 24,753, so the Nifty has a wider range of 25,131 and 24,753 i.e. by 378 points,” he said. Jay ThakkarVice President and Director of Derivatives and Quant Research at ICICI Securities.
The MACD momentum indicator is in selling mode on both daily and hourly charts, so the trend remains sideways to negative until the levels of 25,200 are breached.
“From the derivatives data point of view, PCR is at 0.61 hence it is bearish, however, it is moving closer to 0.50 i.e. closer to the oversold territory. Now if it hits oversold territory in H1 then there is a chance of a rally, otherwise it may remain there indicating oversupply at higher levels on the day of weekly expiry,” Thakkar added.
The IV has again jumped above 14 levels and the IVR and IVP levels are 23.71 and 38.8 indicating that there is a possibility of rising IVs in the September series. As far as options OI is concerned, the highest call OI is placed at the strike of 25,000 while the immediate put OI is placed at the strike of 24,700 and below that strike of 24,500 indicating that till the 25,000 levels are not cleared, the probability of a sideways to negative momentum is higher. Given these indications, Jay Thakkar suggests implementing a bearish sell ladder in Nifty for potential gains:
Ladder for placing bears
The ladder put option strategy is a neutral to bearish trading strategy. It aims to earn good returns but carries slightly higher risk. This strategy works best when the market is expected to be slightly bearish with low volatility. In this strategy, a trader can buy one at-the-money (ATM) or in-the-money (ITM) put option and sell two out-of-the-money (OTM) put options at different lower strike prices.
This strategy is similar to a Bearish Put Spread but with an added twist that involves potentially higher returns and risks.
(Prices as of September 11)
Below is the strategy results chart:
ETMarkets.com(Source: ICICI Securities)
(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the opinions of Economic times)
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