RELIANCE: Strong Resistance at ₹1600 — Covered Call Setup

28 thg 5

📉 Chart Context:

• Reliance recently rallied ~25% from lows near ₹1,150 to ₹1,450.
  
• The rally stalled at the broken lower trendline of a long-term channel, turning resistance.
  
• Price action now showing rejection around ₹1,435–₹1,450 zone — a historical supply area.
  

📊 Derivatives Insight:

• July ₹1600 CE has the highest Open Interest across the chain: 3.6 lakh+ contracts.
  
• This strike acts as a clear ceiling for market participants.
  
• IV for ₹1600 CE is elevated at 21.8%, indicating overpricing of far OTM risk.
  

📈 Strategy:
Strategy Bias: Neutral / Mildly Bearish
⚠️ Note: This strategy is suitable only for investors already holding a sizeable position (≥500 shares) in Reliance. It is not a recommendation to buy the stock solely for option writing.


With 500+ shares held, this aligns perfectly for a covered call:

• Sell July ₹1600 CE at ₹7.20
  
• Generate passive income (~₹3,600/lot) while capping gains ~13% above CMP
  
• Play on sideways or weakening structure without exiting core position
  

⚠️ Risk Management:

• If Reliance breaches ₹1600 before expiry, gains above this are capped
  
• Position sizing and pledge margin must be managed correctly
  

📌 Conclusion:
This is a textbook low-risk income strategy using technical resistance, OI data, and IV edge. Unless a fresh breakout emerges, ₹1600 stands firm.

Disclaimer: This analysis is for educational and informational purposes only. It does not constitute investment advice or a recommendation. Options trading involves risk. Always do your own research or consult a financial advisor before making decisions.

15 thg 6

Ghi chú

Expecting range-bound action; covered call remains low-risk income strategy while upside remains capped.

1 thg 7

Giao dịch được đóng thủ công

The original setup relied on price staying capped near ₹1460–₹1500. That cap has eroded. With breakout strength building, the risk of assignment outweighs potential yield. Strategy stands invalidated — no longer a favorable covered call candidate at this stage.

10 thg 8

Ghi chú

I think, overall the strategy held. Reliance didnt hit 1600. It was a good call.