Monday, 15 May 2017

INDIA VIX a Life time Low-Grab Opportunity on Option

Hello Friends

India VIX today made a life time low of 8.83. Generally IVs follow inverse relationship with Nifty Index.

Previously India VIX had made low of 9.35 on 24th Nov 2014 with Nifty closed at 8530; now lets analyze the Nifty behaviour:

Nifty made high of 8627 on 4th Dec 2014 & then a low of 7961 on 17th Dec2014 i.e. in the span of  23 days after making IVs low of 9.35 Nifty witnessed correction of 7.7%.

Looking at the past trend & current scenario with IVs making newer lows indicates that IVs should give some throwback which in turn will give some selling pressure to the markets.

Also looking at the option concentration data, 9500 Calls seeing huge OI in May as well as June series suggesting strong hurdle zone. Nifty had been making higher high since last 6 consecutive months & a kind of consolidation with some selling at higher levels is quite probable.

To play the downwards move with limited risk, One should go with OTM Put Buy for June series. Being IVs are at lower levels option premiums are also on lower side which favours the Option buy trade.

Trade: Accumulate 9100 June Series Put@28-33; Upside Target Open for 100+

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