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CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

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Saturday, July 29, 2017

Equity Tips
With the Nifty having topped the 10,000-mark convincingly, bullish traders have now set their sights on the index having a free run for another 200-300 points.

The 50-share index has risen around 22 percent so far this calendar and the uptrend has been a fairly consistent one.

If you are among those who feel that the index still has steam left in it, buying a call option for a strike price at the nearest 100-point multiple early on in the new F&O series would be the best way to play the trade.

F&O series in 2017 starting from January, which shows that the Nifty index has topped a 100-point multiple at least once in every series.

This interesting trend hindsight shows that if investor had bought out-of-the-money call option for strike price closest to the next 100 multiple of NIFTY level on the first day of the new series and sold it as soon as the option is at-the-money or near to that, he would have gained a minimum of 12 percent and maximum of 105 percent on that option. We did the back testing of this for the last seven F&O series.

For e.g. on the first day of January series, Nifty 8200 Call open price was Rs 86.95 (8200 call was considered as previous F&O series closed at 8103.60). Within the series Nifty first closed near 8200 mark on January 04, 2017 at 8190.50 level, on that day Nifty 8200 call premium was 110.60. This trade has given 27.20 percent return on one lot to the derivative trader.

Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
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