F&O Radar | Deploy Bull Condor in Nifty for potential gains from positive market breadth

Nifty managed to close positive on a weekly basis after a stellar rally in the last week of June while the first week of July saw some muted sessions and mild profit booking, but, we believe the upside is much higher amid these overdue corrections.

“Nifty took support at 24230 which is Fib Ext of the event move. The next upside resistance is at 1.618, yes the golden ratio or the extreme or mean ratio. On the downside, support is established at 24230 and 24180. This is what bulls need to defend. We have the Union Budget in sight this month and quarterly numbers will also be coming in,” said Shrey Jain, Founder & CEO of SAS Online.

In the short-term, the view remains bullish for two reasons: firstly, the breadth has improved in the last one week as the number of stocks below 20 MA has improved by a stellar 20% and now 78% are above 20 MA. Secondly, the technical reading on RSI has crossed above 70 this week, a momentum thrust and 4 Hourly charts (short-term reading for a week) have witnessed ADX crossing above 25 and positive DI gaining traction, Jain added.


OI analysis for next week points to concentration of CE at 24200 while on the higher side highest PE concentration is at 24800. The ATM IV continues to drop and is at 9.46 indicating muted premiums.

In such a scenario, Shrey Jain recommends deploying a Bull Condor Spread to gain from the positive momentum.

Bull Call Spread

The bull condor spread is an options trading strategy designed specifically to return a profit if the price of a security rises to within a forecasted price range. It's somewhat similar to the bull butterfly spread, but it doesn't require quite the same levels of accuracy. It's an advanced strategy that requires four separate transactions to create a debit spread.

(Prices of 5th July)

Below is the payoff graph for the strategy:

(Source: SAS Online)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)