F&O traders expect Nifty to trade in 7,780-8,820 range till April 9

Mumbai: Betting that the market could find short-term support around 7,840 and face resistance at 8,883, option traders have sold a weekly Nifty call and put option (straddle) at 8,300 level. The market closed at 8,254 on Wednesday. The options expire on April 9.The price demanded by the 8,300 straddle seller on closing basis Wednesday is Rs 520 a share (75 shares make one contract). His lower breakeven price, below which he begins to lose, is 7,780 and the upper breakeven, above which loss begins, is 8,820.Of the levels the trader is banking on, 7,840 is the 78.6% Fibonacci retracement of the bounce from multi-year low of 7,511 on March 24 to 9,038.9 on March 27. The 8,883 level was the high made just two sessions before the Nifty tanked to 7,511. Both are seen as support and resistance by the option player who has taken on huge risk of writing in the belief that these levels would be respected this week.However, analysts like Rohit Srivastava of IndiaCharts and Hormuz Maloo of AFco Investments believe that the market could well make a new low if the 7,840 level is breached. Maloo says the lowhigh range of 7,511 and 8,037 on March 24 could be sliced through if the sentiment “sours more” and this could expose the writer to great risk unless she has placed a stop loss at the Rs 620-650 per share level.74958866The maximum gain of Rs 520 the trader makes happens if the Nifty expires at 8,300 on April 9. Every point above or below reduces the profit until the upper or lower breakeven points.FIIs on Wednesday raised their cumulative net short on index futures Nifty and Bank Nifty — by 20,775 contracts to 63,014 contracts. In the calendar year through March end they have sold equities worth Rs 48,030 crore.

from Economic Times https://ift.tt/39FTJ4u