Nifty in a bullish to neutral mode. We went long at 24330

On 6th May, Nifty tried to come out of a consolidation zone with a break to the upside by forming a nice long green candle. Nifty closed at 24330 which was higher than our buy trigger value of 24227 for that day as per the spreadsheet given below. It also decisively closed above the EBR/EBL band and the MHAF candle was strongly bullish at the end of the day. Accordingly we went long near the close of the day by creating a covered call position.

We bought Nifty May futures at 24430 and simultaneously sold May 24500 CE for Rs 325 premium. As per our strategy, this position gave us a break even point at 24105 where we need to take our next action, or otherwise just hold on to the current position until 80% of the maximum probable profit becomes realizable.

However, the market couldn't sustain the momentum it displayed on the 6th May and the next 2 trading sessions were weaker. Nifty did move up to 24480 but started sliding back from there reaching 24127 on 8th May before closing at 24177. This closing was above our BE point at 24105 as mentioned above, hence no action was taken. If today Nifty closes below 24105, we will go short on the future and will sell near OTM puts while keeping the short call position intact.

Currently the position has an unrealized loss of Rs 23765 which should move towards break even or even a profit if Nifty stays here for long or gradually starts moving up again but that seems very unlikely and we may have to reverse our bias very soon.

Cheers and happy trading.