"Markets opened with positive gap and traded positive for most part of the day, and finally closed postively at the upper end of the day's range, due to short covering. Nifty finally settled at 4282, lower than may settlement price of 4295.80, which is forecasted throught the series.
Our short term strategy of selling june series 4150 put and 4350 call has given complete profit, if followed.
Strategy for June'07: written on Thursday, May 31, 2007
One can sell a strangle of 4150 put option at Rs.60.00 and 4350 call option at Rs.60.00; One needs to keep an initial margin of
Rs.50000/- and shall receives Rs.6000/- which works out to 12% return for the month.
Assumption:
Nifty shall move between 4150 and 4350 during the month of June and if settles in that range by settlement day i.e., 28.06.2007 the entire premium received shall be the profit earned. The position will have break even at 4030 on down side and 4470 on the upside, beyond which levels the loss shall be unlimited. Hence, once has to go long or short the nifty futures on crossing the threshold levels of 4150 on the down side or 4350 on the upside. "
Markets have traded sideways through out the month and consolidated well. They are on the verge of break out depending on the corporate performance which will start tickling from second week of july. July also will be volatile, since the performance of all sectors and companies shall not be uniform, with still few concerns on raise in crude oil price, firming of interest rates, other monetary measures by RBI to control the liquidity, M3, exchange volatility etc.,
US Fed has put the rates on hold yesterday, as generally expected, the policy statement on tackling inflation etc., are awaited, apart from the concern on subprime issues how effect the other sectors of US economy. June series are behind us. Today is the last day of the month, and quarter for us, and market players will concentrate on the expectation of results for the first quarter. Inflation data shall be released at 12 noon, markets shall be choppy today, as bulls will be attempting to see the markets close above may closing levels, and the bears will try to keep the markets under pressure by pressing sales due to week end consideration.
Markets might finally settle above may closing today, since index funds would like to ensure positive NAV, month on month comparision. If this happens there will be clear rally from monday onwards. we will give strategies for July in our next addition.
The day's range for Nifty shall be 4250 (Support) and 4350 (Resistance); Sensex shall be 14300 (Support) and 14700 (Resistance)
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