F&O Radar: Deploy Bull Condor in Nifty to gain from moderately bullish market outlook
The Nifty50 index closed positively for the sixth consecutive week, surpassing the 24,500 mark for the first time. Analysts suggest a bullish outlook with caution on resistance levels.
The benchmark index, ended on a positive note for the sixth consecutive week, ending above the 24,500 mark for the first time. On a weekly scale, the index has formed a bullish candle carrying higher highs and lows as compared to prior candle.“Technically we have enjoyed an upward momentum since March 2023 making higher highs and lows but at present the ADX, a trend strength indicator on weekly scale is at 24.96 and sloping downwards for a while,” said Shrey Jain, Founder of SAS Online.
As per chart on 4 hourly time frame, A channel is seen forming where the range for Nifty 50 indicates upward momentum capped at 24,600-24,650 while on downside support is at 24,200-24,150.
Fib Extension of the move of first week of June indicates 1.618 retracement at 24651.15 which may act as resistance while 1.414 is placed at 24231. This also coincides with our channel pattern. We need a break above 24650 for the next leg of bullish move to 24950 or a retracement to 24200 will work as a shakeout, Jain added.
The IV-RV Spread is at similar levels of June 1st week, at 144.29 while IV at 13.73 indicates one day range of almost a percent. The OI analysis points to concentration of long build up at 24,600-24,900 while on PE side short build up is at 24,400-24,300.
In such a scenario, with a biased bullish scenario with underlying breadth better and momentum positive Shrey Jain suggests deploying a bullish condor .
Bullish Condor
The Bullish Condor Spread is an options trading strategy designed for a moderately bullish . This strategy aims to capitalize on a slight increase in the price of the . It involves a combination of buying and selling call options at different strike prices.
ETMarkets.comBelow is the payoff graph of the strategy:
ETMarkets.com(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
