Underlying: S&P CNX Nifty Index
Option Type: Both call and put
Strike Price: 5400 call and 4900 put
Units: Buy 2 units of 5400 call and 1 unit of 4900 put
Current Market Price: Rs. 66.50 for the call and Rs. 38.50 for the put.
Total Investment : Rs. 8585
Target Price: Combined Premium reaches Rs. 245
Stop Loss: Combined Premium reaches Rs. 95
Rationale: Volatility expansion with Bullish view
The market has been moving in a narrow range with the volatility remaining low for a long time.
The undercurrent is bullish and a momentum run is likely to happen anytime soon, the implied volatility of calls being much lower than that of puts.
To cash in on the above views, an additional call is added to the 5400 call and 4900 put strangle.