Sell Bullish Options on Indian State Banks, Morgan Stanley Says
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Investors should sell bullish options on India’s state-owned banks because their values may fall as lower lending profits reverse the “strong” revenue growth of the past two years, Morgan Stanley derivatives strategists said.
Viktor Hjort and Gaurav Rastogi recommended selling six-month over-the-counter CNX Bank Index call options with a strike price 10 percent above the index level. The 12-member gauge has rebounded 12 percent from a six-month low on Feb. 10. State Bank of India Ltd. and the six other state-owned banks account for 34 percent of the index weight, the report said.