The document provides daily derivatives outlook and recommendations for option trades in the Indian market. It recommends short strangle and straddle trades for the Nifty, Bank Nifty and USD/INR using various strike prices based on open interest data. It also lists bullish and bearish option trades, recommending buying or selling calls and puts on various stocks. Notes on option strategies are provided, covering advantages, stop losses, profit taking levels and different strategy types.

1. Daily Derivatives Outlook
31 December 2012
Short Strangles & Straddles
Sell Calls & Sell Puts
Simultaneously
Nifty( Jan, Feb, Mar)
Highest Call OI at 6000 Bullish Call Option Trades
Highest Put OI at 5800
Equilibrium at 5900
5900C & 5900P Buy HPCL 300 CALL at 6.5
6000C & 5800P
Buy ONGC 270 CALL at 4.9
6100C & 5700P
6200C & 5600P Buy Pantaloon 260 CALL at 9.9
6300C & 5500P
6400C & 5400P Buy Karnataka Bank 170 CALL at 9.5
Bank Nifty(Jan)
Buy NMDC 170 CALL at 2
Highest Call OI at 12500
Highest Put OI at 12500
Equilibrium at 12500
12500C & 12500P Bearish Put Option Trades
12700C & 12300P
12900C & 12100P Buy Coal India 340 PUT at 2.3
13100C & 11900P
13300C & 11700P Buy M&M 920 PUT at 17
13500C & 11500P
USD/INR(Jan) Buy Powergrid 110 PUT at 1.2
Highest Call OI at 55
Buy RCOM 70 PUT at 1.9
Highest Put OI at 55
Equilibrium at 55 Buy Titan 280 PUT at 8
55C & 55P
55.25C& 54.75P
55.5C & 54.5P
55.75C & 54.25P
56C & 54P
56.25C & 53.75P
Keynote Capitals Ltd.
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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322

2. NOTES ON OPTION STRATEGIES :
1. Advantages of Options – Profit from Trading range Markets, High Leverage, Built-in
Stop Loss, Higher Probability of Profit using Spread Trades and Increase in trading
opportunities due to multiple legs.
2. Stop Loss : Use 50% stop loss for bought options and 100% stop loss for sold options.
3. Profit Taking : Book profits at 100% for bought options and 50% for sold options.
4. Put Call Ratio ( Open Interest) is bullish at levels between 0.8 to 1.2 and bearish
between 1.75 to 2.
5. Equilibrium strike is with equal Call and Put Open interest with Highest Call Open
interest strike as resistance and Highest Put Open interest as support.
6. Long Call and Long Put are Limited Risk and Unlimited Reward strategies.
7. Short Call and Short Put are Unlimited Risk and Limited Reward strategies.
8. Long Synthetic and Short Synthetic are Unlimited Risk and Unlimited Reward
strategies used instead of futures to save margin.
9. Long Straddle ,Long Strangle and Long Guts are long volatility strategies ahead of
events/results etc.
10. Short Straddle, Short Strangle and Short Guts are Short volatility strategies when
range-bound action is anticipated.
11. Protective Put and Protective Call protect futures positions by buying options.
12. Collar is a combination of the Covered Call and the Protective Put or the Covered Put
and the Protective Call.
13. Covered Call/Ratio Call Write Put and Covered Put/Ratio Put Write cover futures
positions by selling options. They involve unlimited risk and limited reward.
14. Bull Call Spread , Ratio Bull Call Spread and Bull Call Ladder are bullish debit spreads
which involve buying a lower call option and selling upper call options.
15. Bear Put Spread, Ratio Bear Spread and Bear Ladder are bearish debit spreads which
involve buying a upper Put option and selling a lower Put option.
16. Bull Put Spread is a bullish credit spread which involves selling a upper put option and
buying a lower put option.
17. Bear Call Spread is a bearish credit spread which involves selling a lower call option
and buying a upper call option.
18. Long Iron Butterfly is a combination of the Bull Put Spread and Bear Call Spread while
Short Iron Butterfly is a combination of the Bull Call Spread and Bear Put Spread.
19. Long Term Options can be used to create investment grade positions using spreads,
synthetics and covered /protective positions.
20. Calendar/Diagonal Calls is a debit spread involving buying a long-dated call option and
selling a short-dated call option against it ( Diagonal Calls involve different strikes).
21. Calendar/Diagonal Puts is a debit spread involves buying a long-dated put option and
selling a short-dated put option against it ( Diagonal Puts involve different strikes).
Keynote Capitals Ltd.
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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322

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The Ruby, 9 Floor, SenapatiBapatMarg, Dadar (W), Mumbai, India – 400028. Tel: 3026 6000 / 2269 4322