I hold seven lots of August 31 expiry 44300-call option on Bank Nifty. The average price is ₹249. Can I hold or sell on August 28, Monday?
Naveen Kumar
Nifty Bank (44,231): The trend has been bearish since the beginning of August. However, the index has a strong support between 43,400 and 43,900. Until these levels are breached, the job will not be easy for the bears. At the same time, 44,500 and 45,000 have been stopping the bulls from gaining momentum and go beyond these price-points. So, as it stands, the next leg of trend remains uncertain.
At this point in time, staying on the long side of options may not work unless it is an intra-day position. Also, for the index to take either direction, you need to give some more time. Considering these factors, we advise to exit the August expiry 44300-call which closed at ₹196 on Friday. After that, you may choose to do any of the following alternatives.
One, short put option, preferably 43000-strike of September expiry. To reduce the margin, you may as well go for bull put spread instead of selling plain-vanilla put option. That is, short 43000-put and simultaneously buy a put option with lower strike, may be 42500-put. Choose the lower strike based on your risk appetite and risk-taking ability.
Two, you may buy a call option but of September expiry so that you will have more time before the next price swing in the index plays out.
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