J.P. Morgan Chase & Co. revealed a $2 billion derivatives trading loss eroded the sentiment

 

BSE Sensex (16300.42) and Nifty (4928.90) closed  down  3.2%  and  3.1%   respectively  last week.Nifty Future May was quoting at 0.10  points premium.Nifty call option May  5000 was very active.Support for Sensex is at  15780. Resistance for Sensex is at 16750 .Support for Nifty is at 4770 and resistance at 5075.

Ashok Leyland,JSW Steel,Unitech,Bajaj Auto,Tata Steel  and Coal India will declare Q4 results next week.. Hopes of further interest rate cuts by the Reserve Bank of India to boost the economy may invite selective buying at lower levels.

ICICI Bank and  SBI added Open Interest in May  series.Huge position was build up at  SBI  Call Option Strike 1900.Good build up was also seen at  RIL May Call Option Strike Price 700.

Strategy  for Futures Option players.                                                                       

1)RIL(697.20) lot size 250 shares                                                                                                                                                                                                                         

Buy One Call Option of  May Strike Price 700@13.85  Rs

Sell One Call Option of  May Strike Price 720@7.45  Rs.

Premium .Paid= 13.85*250=3462.50 Rs.

Premium Received= 7.45*250=  1862.50 Rs.

Net Premium Paid=3462.50-1862.50=1600.00 Rs.

Maximum Profit==720-700 =20*250=5000-1600= 3400.00 Rs.-

 Maximum Loss=  1600.00 Rs.

Break Even Price= 706.40

2)SBI(1852.70)   Future-Lot Size 125 shares.

Buy One Lot May   Future  @1852.70 Rs

Sell One Call Option of  May Strike Price 1900@ Rs.58.70

Premium Received=58.70*125= 7337.50 Rs

Maximum Profit=1900-1852.70 == 47.30*125=.5912.50 + 7337.50=13250.00 Rs.

Max Loss=Unlimited.

           

Trading Idea

1)IDFC(120.85) Buy this stock in decline and trade                                                                                                                                                                                                                                .

2)COLPAL(1181.10) Buy this stock in decline and trade

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Narendra Nainani

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Bullet Advisory Indian Stocks-India's Top Most Stock Investment Advice Blog,Hot Stock Tips by Expert Technical Analyst Narendra Nainani of India.Most Preferred Paid Subscription Stock Investment and Portfolio Advice Website India.Most Successful Stock Future Calls Provider Service Indian Share Market.

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