F&O strategy for a possible near-term rally in Nifty

Mumbai: The BSE Sensex, which opened on a firm foot on Tuesday, stayed in the positive zone throughout the day and closed at 37,930.33, up 511.34 points, or 1.37 per cent. The NSE Nifty rose 140.05 points, or 1.27 per cent, to end at 11,162.25.

For those wanting to play probably the last leg of the Nifty rally for now, analysts are suggesting a bull call ladder. The call ladder is a relatively cheaper strategy given that the monthly Nifty put call ratio has hit a high 1.78, which signals risk.

It involves buying an 11,200 call and selling one 11,400 and one 11,500 call each. The sale of the out of the money calls reduces the upfront cost of the 11,200 call. It fetches the trader a provisional 86 a share and reduces the upfront cost of the 11,200 call to just 43 from 129. All options expire on July 30.


The profit begins after 11,243 and runs right up to 11,500, a risk reward of 3.65:1. The risk of unlimited loss begins post 11,657, an unlikely event this month, said Rohit Srivastava, technical expert at IndiaCharts.