F&O Radar | Deploy Bear Put Spread in Nifty to gain from bearish market stance
It also formed a bearish candle on the daily chart with a long upper shadow, indicating that the sell-on-rise trend may continue.
“As long as the index trades below 24,200, further weakness could be seen towards 23,900 and then 23,800 zones, while hurdles are seen at 24,300 and then 24,400 zones,” said Chandan Taparia, Senior VP, Equity Derivatives & Technicals, Broking & Distribution of Motilal Oswal.
The India VIX rose by 1.89%, from 15.87 to 16.17. Volatility has increased over the last three sessions, which is more comforting to the bears.
On the options front, the maximum call open interest (OI) is at the 25,000 and then the 24,500 strike prices, while the maximum put OI is at the 23,500 and then the 24,000 strike prices. Call writing is observed at the 24,300 and then the 24,500 strike prices, whereas put writing is seen at the 23,900 and then the 24,100 strike prices. Option data suggests a broader trading range between the 23,600 and 24,600 zones, with an immediate range between the 23,800 and 24,500 levels.
“Overall, we can ride the negative to range-bound stance and expect that any small bounce could be sold for a downside move towards 23,900 zones,” added Taparia.
Chandan Taparia suggests deploying a Bear put strategy in Nifty to get the benefit of the bearish stance along with market volatility.
Bear Put Spread
Traders use this strategy when they expect the price of an underlying asset to decline in the near future. It involves buying and selling put options with the same expiry but different
