For the Last few weeks we have been seeing Nifty trading in a small 400-500 point range around the15000 mark. Take note that this is just Nifty’s calm before it sees a break towards either side of this range decisively. The best way to play Nifty for this breakout is something that I have done in sizeable qty. We have bought the May strangle on the long side of both the 14500pe and the 15500ce at a combined premium of Rs.760. Now I know what most of you are thinking, Buying of options ? That too far month ?
Absolutely yes, As the VIX has partially cooled we entered into this with selling weekly offset units every week till the end of May. This prevents us from predicting the market direction which mind you is anybody’s guess right now. In my last blog, I had categorically mentioned that the fall that was underway in Nifty and Banknifty was the best times to enter the market, and all those people who were complaining about FOMO(Fear of missing out), should use this opportunity and buy. Hope you all had a chance to do that. I also mentioned that BankNifty would make a great entry close to 29000, which is exactly where it turned around, so good money to be made all around. I mentioned about Tata motors also having sky high premiums and a short strangle/straddle on that one, both would have made you handsome returns.
This month around, I’ve planned something different in TAMO, I have taken a OTM Modified ratio spread of 1:5 using the April series as an anchor unit and March as the offsets. We continue to maintain our buy on Asian Paints for the long term, and also picked up some NCC close to 84. Remember, we are still in a bull market, so the eventual direction is still biased on the upside. The sharp corrections as I pointed out the last time round are a characteristic of it. KEEP that in MIND ! Each time the media and the market will give you a different reason for the sharp fall.. US bond yields, Resurgence of Corona etc to name a few. But the blunt truth is that we don’t need a reason to fall. Just play it like we see it !
