Adani Only for Big Trader While Small Trader Took Advantage of Delta Corp F&O

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A lot of people expressed that the Adani Enterprises (NS: ADEL ) F&O opportunity was only for big traders due to high entry cost then to everyone's surprise today small traders took advantage of Delta Corp (NS: DELT ) F&O post-ban was lifted, to earn similar profits as the big traders did yesterday.

Understanding F&O security ban status due to Market Wide Position limit (MWPL)

The Future & Options contracts of any stock enter the ban period when the open interest (OI) on it crosses 95% of the MWPL. The ban on it is reversed only if the open interest falls below 80%.
Please note: Traders who trade in indices f&o do not encounter a situation of security ban.

Saga of how, when, and why small traders selected delta corp for F&O trading in the May 2023 series.

Today's F&O Ban list:

Three stocks were under the F&O ban list today for trade on Tuesday, 23rd May Indiabulls Housing Finance Company, Manappuram Finance (NS: MNFL ), and L&T Finance Holdings (NS: LTFH ) (L&TFH). The banned stocks would be available for trading in the cash market without any hiccups.

Yesterday's F&O Ban list:

Six stocks were under the F&O ban list yesterday for trade on Monday, 22nd May, namely Delta Corp, Gujarat Narmada Valley Fertilizers and Chemicals (GNFC), Manappuram Finance, Balrampur Chini Mills (NS: BACH ), L&T Finance Holdings, and Aditya Birla Fashion (NS: ADIA ) and Retail (ABFRL).

Stock no 1:

Aditya Birla Fashion and Retail (ABFRL) on Monday 22nd May, posted a loss of Rs 186.94 crore in the fiscal fourth quarter as against a profit of Rs 43.59 crore in the corresponding quarter last year. Hence it was simple for small F&O traders to rule out the call option in this counter for May 2023 series.

Stock no 2:

Gujarat Narmada Valley Fertilizers & Chemicals Ltd (NS: GNFC ) posted the Q4 results 4 days ago and the Net profit fell to Rs 334 crore in the last quarter against Rs 643 crore in the corresponding quarter of the previous fiscal. Revenue slipped 18% to Rs 2271 crore in Q4 from Rs 2772 crore a year earlier and further for fiscal 2023, net profit stood at Rs 1,464 crore, down 14 percent from Rs 1,704 crore last year. Revenues from operations stood at Rs 10,227 crore for the year, as against Rs 8,642 crore last year. Hence once again it was simple for small F&O traders to rule out the call option in this counter for May 2023 series.

Stock no 3:

Delta Corp posted its Q4 result last month on 11th April 2023, whereby it reported a consolidated net profit of Rs 51 crore for the quarter ending March 2023. This was an increase of 6% compared with Rs 48 crore in the same period last year.

The J2K (justified 2 know) moment:

  • In simple words, the common sense approach was to find out which 3 stocks were removed from the ban list and which of those 3 stocks had some kind of opportunity for small f&o traders in the May 2023 option series. 
  • Delta Corp was on a continuous uptrend from 187.30 post result day (I.e. 22 April 2023) moving up to 222 levels till yesterday while the stock was in the Ban list for 22 May 2023. 
  • Therefore with the ban lifted today on 23rd May 2023, small traders got a chance to build a long position for delta corp call option (CE) in the May F&O series, and to everyone's surprise... 


Once the ban was lifted all the small F&O traders (with limited funds) who witnessed the rally in Adani stocks yesterday and could not participate or missed out because of the high entry cost were suddenly ready to take advantage of the Delta Corp uptrend and ban being lifted circumstances.

Hence today as soon as the market opened within the first hour by 9:55 am, we could witness that delta corp was in demand for May 2023 series: expiry on 25th May, especially with CE Strike of 230 and 235, and the price of these options was rising continuously to such an extent that towards the EoD: price rose 963% and 1350% respectively, thereby giving similar opportunities to small f&o traders to earn big money in delta corp as the big players did in Adani Ent and that too in the same calendar month of 2023 May F&O series.

However, Since Delta Corp has closed above the 235 levels and only 2 trading sessions left for the 25th May 2023 expiry, a cautioned approach will not only be advisable but recommended with strict stop loss if the stock goes below the 233 ~ 235 levels because the point to remember is that the stock has been in an uptrend since 12th April 2023 post the result day and profit booking at higher levels is imminent in such a highly volatile market.

Disclaimer: The above article is for self-educational purposes. The analysis was conducted by the following students: G10 & RJ for learning purposes.

“Investing involves substantial risk. Neither the author nor the publisher, nor any of their respective affiliates make any guarantee or other promise as to any result that may be obtained from using the research/report. While past performance may be analyzed in the research, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own personal financial and/or investment advisor and conducting his or her research and due diligence, including carefully considering whether it is suitable for your particular circumstances, as this research/report does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendation appropriate for you. In the event, that any information, commentary, analysis, opinions, advice, and/or recommendations in the research/report prove to be inaccurate, incomplete, or unreliable or result in any investment or other losses, the author, the publisher, and their respective affiliates disclaim any and all liability to the maximum extent permitted by law.

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    25th May 2023 expiry for Delta Corp CE 230 and 235 @ 14.40 & 2.50 (but high was 5.30)
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