Sell 3rdAugust Nifty 19650 Call at 95-100 & Sell 3rdAugust 19650 Call at 95-100, Stoploss: 5; Target: 50, Stoploss 300. Time Frame: till expiry.
Rationale
Nifty snapped its 4 weeks of consecutive gains and witnessed some profit booking from higher levels during the monthly settlement. However, broader markets remained firm where midcap and small cap indices continue to outperform and closed in green. Going ahead, we believe that Nifty may spend some time in the range of 19500-19800 levels amid stock specific actions after gains of 4 consecutive expiry.
Nifty has started the August series with 5 months high open interest at inception as continued buying momentum was observed during the series. Also, the Nifty premium has risen significant during settlement and moved beyond 150 points before closing near 110 points on Friday. Considering dividend of near 50 points during August series, the net premium is still on a higher side and Nifty may witness some consolidation in coming sessions. We expect July series VWAP near 19550 levels to act as an immediate support for Nifty.
In the options front, Call writers have been a bit more aggressive due to profit booking seen among heavyweights last week with highest Call base placed at 19800 strike. Despite weakness, Put writing has largely remained intact where 19500 and 19600 strike hold significant open interest. Hence a round of consolidation is likely to be seen in the index and only a move beyond the range may trigger further directional movement.
India VIX has moved to 10.20 levels which is one of lowest levels for the volatility. A rise in volatility remains a crucial risk as we move into new series. Hence one should consider levels near 19500 as a stop loss for long positions.
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