Options pair trade in BPCL & Axis Bank!

BPCL (cmp 674) has been a extremely bullish stock in the past. This year also it has risen almost 90% from the lows of 365. Whereas after making a low of 370 in Jan this, Axisbank (cmp 485) rose to the levels of 640 but could not sustain there & is in correction mode.

We believe nifty will remain in sideways trend as it has been for last 3 months. In a sideways market, bullish stock move higheror do go down & bearesh stocks move lower or do not move up. Assuming BPCL to remaain bullish or sideways & Axis bank to remain bearish or sideways, we recommend selling 1 lot of BPCL 660 pe @ cmp 13.5 & selling 1 lot of Axisbank 500 ce @ cmp 8.5. We are expecting BPCL to move towards 700 & Axisbank to move towards 465. If both the stocks move as per expectations, the BPCL pe should be go to 5 & Axisbank ce to 3. The target profit for this strategy is premium inflow of Rs. 16800.00. The SL for this strategy should be premium outflow of Rs.35000.00. The total margin required is Rs. 205000.00.