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I’m holding Bank Nifty 48100-put option bought for ₹520. I bought 6 lots. Shall I hold or exit? – Sudheer Kumar
Bank Nifty (45,900): The banking index underperformed the benchmark Nifty50 by falling nearly four per cent versus Nifty’s decline of a little over one per cent so far this week. This led to a spike in the price of the 48100-strike put option. The contract is now in-the-money (ITM) and it is now trading around ₹2,150.
Although the index has fallen sharply in the recent sessions, the overall uptrend remains valid. Also, Bank Nifty has an important support nearby at 45,400, where the 20-week moving average coincides. Below this is another support at 45,000. At the same time, there is a resistance at 46,400. Only a breach of this level will bring back the momentum for the bulls.
Effectively, the next leg of trend depends on the direction of the break of the 45,000-46,400 range.
Given the above scenario, we suggest liquidating four lots of 48100-put option at the current market price of ₹2,150. For the remaining two lots, place a stop-loss at ₹1,780 and hold till expiry.
Send your queries to derivatives@thehindu.co.in
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