Nifty Long Put Butterfly Strategy: March 10

Short build up is seen in the Nifty futures where we have seen rise in OI with fall in price. Short term trend of the Nifty is weak as it is placed below its 5, 11 and 20 day EMA. In the option segment we have seen Call writing at 24200-24500 levels suggesting strong resistances around those levels. On the downside we expect Nifty to find support around 23700 level. Therefore, we recommend a Long Put Butterfly Spread strategy on the Nifty.

Action to be taken

• Buy 24200 Put @ Rs 302, Buy 23200 Put @ 66 & Simultaneously Sell 2 lot 23700 Put at Rs 144.
• Max Profit Rs 27300 If Nifty closes at 23700 on 17-Mar Expiry.
• Max Loss Rs 5200
• Breakeven point: 23280,24120
• Risk Reward Ratio: 1:5.25

(Approximate margin payable for the strategy Rs.72000 (for exact margin, pls consult risk team email or check margin calculator on website)

Please note that the spread position may be exited early depending on the reading of the market.

Nifty Long Put Butterly Strategy Payoff Diagram