“It (Nifty) continues to move steadily higher in a small intra-day range and any small decline is quickly absorbed by the bulls,” said Chandan Taparia, Senior VP, Equity Derivatives & Technicals, Broking & Distribution, Motilal Oswal.
Currently, it has more than 24,200 zones, with momentum to expand to 24,750 and 25,000 zones, added Chandan.
India VIX rose 0.25% to 14.22 from 14.11. Volatility is slightly higher but it is hovering in its lower zone which is still comforting to accelerate the bulls.
Option data suggests a broad trading range between 24,200 to 25,000 zone while an immediate range between 24,400 to 24,800 levels.
“Overall we can ride a positive to range-bound trend and expect any minor dips to be bought for a rise towards the 24900-25000 zone,” Chandan said.
Given such circumstances, Chandan Taparia believes that one can start a bull call spread options strategy to take advantage of the bullish trend without worrying too much about theta decay.
Bull call spread
A bull call spread is an options trading strategy that uses two call options. It is usually used when a trader expects a modest increase in the price of the underlying asset.
(Prices till July 16)
Below is the payoff graph of the strategy:
(Source: Motilal Oswal)
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)
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