Is Bank Nifty likely to breach resistance level of 42750 due to good ICICIB & Kotak results?

The Bank Nifty (42500) is stuck in a range & will react to the good results of ICICI & Kotak. Heavy resistance is at 42750 where there are heavy Call shorts. If this resistance is broken, shorters will cover aggressively which will catapult the Index to higher levels. Top traders are loaded with Call Ratios to benefit

Ghanshyam rightly pointed out that the Bank Nifty is stuck in a tight trading range for the past several trading sessions which is alien to its real nature. This placid behavior of the Bank Nifty has induced shorters to sell heavy quantities of Calls and Puts in the hope that the Index will expire within the range and they can pocket the premium earned from the sale.

However, on Monday, the Bank Nifty is bound to react one way or the other given that two heavy-weight Banks, namely ICICI and Kotak have released their results over the weekend. Both Banks have posted robust results with higher profits and lower NPAs.

Ghanshyam explained that the levels of 42722 to 42755 are areas of great resistance. The Bank Nifty has witnessed supply and rejection whenever these levels were approached earlier. However, if there is heavy buying then it is obvious that the resistance will crumple.

Ghanshyam advised that we can consider applying his famous 9.20 strategy (see Bank Nifty Option 9.20 Trading strategy explained by Trader Ghanshyam) if the second candle closes higher than the first one. We can keep the stop loss at the low of the first candle or thereabouts. However, if the Gap Up is too great, then the 9.20 strategy may not apply, he cautioned.

Manu Bhatia has loaded up on Call Ratios with max profit of nearly Rs 40 lakh & margin of Rs 8.5 crore

Last week, Manu Bhatia was bullish and had sold heavy quantities of naked Puts of the 41500 strike price. Though the Index closed above that level, the fate of Bhatia's trade is not known. If he had retained the shorts till expiry. he wold have pocketed the entire premium of Rs 8.5 lakh. However, there was a couple of downward spikes which may have spooked him to exit the trade prematurely.

For the expiry of 25th Jan, Bhatia has announced that he is still bullish. However, instead of selling Puts, he has implemented a Call Ratio. He has bought 43100CE and sold 43300CE and 43500CE. He has pumped in nearly Rs 8.5 crore as margin money for the trade.

The pay-off chart is as follows. The Break Even Points are at 43117 and 43732. If the Bank Nifty expires anywhere between 43300 to 43500, Bhatia will take home the max profit of Rs. 39.59 lakh. However, a close above 43700 will put him in jeopardy and exposure to unlimited loss. A close below 43117 will result in a loss of Rs 3.60 lakh which can be easily adjusted.