Analysis and Game Plan - 23 October 2018

  • Another volatile session. Bank Nifty gave a fake movement to the upside and then Kotak and Indusindbk started the fall.

  • Bank Nifty did not fall much because of gapup opening of HDFC Bank and strong movement in ICICI Bank.

  • Vix shot up to 21.36. It is better to remain in sell side on far away call options.

  • Max Pain and PCR for Nifty came further down.

  • Bank Nifty and Nifty did not witness much speculation today.

  • PCR for Bank Nifty came down, while max pain is steady.

  • Bank Nifty also witnessed some support between 25000-25100.

  • Looking at Bank Nifty Constituent, we may break to downside tomorrow.

  • Technically, we are bearish on daily, 2 hourly and 30 minute charts.

  • SGX Nifty is down 86 points as of now and can give us a gapdown start.

  • Dow Jones closed 0.5% lower, but it made a bearish formation on daiy charts.

  • Crude Oil is well below $80 mark as of now. Any spike above $80 can bring in panic.

  • Rupee also hasnt strengthened much.

Conclusion -

  • I am trading with a bearish bias.

  • Nifty may head towards 10160 10180 before bouncing as per option data.

  • Expecting Bank Nifty to move further down.

  • PCR is at 0.71. When PCR reaches between 0.50 to 0.60, we witness a sharp upmove.

  • Only 3 days left for monthly expiry. Keeping room for a 700 point rally to upside from point of entry, I will look to sell some diagonal call calenders.

Game Plan -

  • I am holding my bear call spread of -5 X 25500 and +5 X 25700. It will cover for losses I incurred today plus some profit.

  • I added one naked call of -1 X 25600.

  • I am targetting for 35-40 points per trade.

  • I will add some diagonal call calenders and will take 4 lots. 2 lots at around 11:20 and 2 at around 2:30 pm.

  1. Bank Nifty opens gapup - I will add straight away bear call spread or Call Ratio Spreads.

  2. Bank Nifty opens flat - Wait and watch

  3. Bank Nifty opens gap down - I will write some diagonal call calender spreads.

Open positions as of now are: -

19 October 2018 - 25 October 2018.xlsx

Rohit Katwal

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