Are you ready to unlock the secrets to a consistent and rewarding monthly income with the "Bank Nifty Option Strategy for Monthly Income" in the world of Indian options trading?
As an enthusiast with over a decade of experience as an Indian Derivative Trader, I'm excited to take you on a thrilling journey through the intricacies of a game-changing strategy - the Broken Wing Iron Butterfly.
This strategy isn't just about trading; it's about securing your financial future and achieving the dreams you've always cherished. So, fasten your seatbelts and get ready for an adventure in trading like you've never experienced before!
In this comprehensive guide, we will explore the "Bank Nifty Option Strategy for Monthly Income" through the lens of the Broken Wing Iron Butterfly. We'll cover its core components, setting it up, managing risks, and, most importantly, how to supercharge your monthly income using this powerful tool.
By the time you finish reading, you'll be armed with the knowledge and confidence to embrace this strategy and propel your trading career to new heights.
So, let's embark on this trading odyssey together, where the path is lined with potential, and the destination is financial freedom.
What is a Broken Wing Iron Butterfly?
The Broken Wing Iron Butterfly is a delta-neutral options strategy designed to generate income while keeping risk under control. It involves four primary options contracts, carefully structured to achieve this balance:
- Short Call: This is where you start. You sell a call option with a specific strike price.
- Short Put: In parallel to the short call, you sell a put option with the same strike price as the short call.
- Long PUT (lower strike): To protect your position and create the 'broken wing' effect, you buy a Put option with a lower strike price.
- Long Call (higher strike): The final piece of the puzzle involves purchasing a call option with a higher strike price. This not only provides further protection but also shapes the strategy's unique risk-reward profile.
The structure of the Broken Wing Iron Butterfly is a combination of selling the short call and put options while strategically positioning the long call and put options at different strike prices. This structure allows you to collect a premium from the sold options while limiting your downside risk and creating potential for profit within a specific price range.
The key to success with this strategy lies in careful strike selection and managing the position effectively as market conditions evolve. By understanding the structure and nuances of the Broken Wing Iron Butterfly, you can harness its potential for generating a consistent monthly income in the world of Bank Nifty options trading.
Remember, while this strategy can be profitable, it requires skill and experience. If you're new to options trading, consider joining my "Options Strategies: A Mentorship Program" at TradePik, where I offer guidance and mentorship to novice traders.
Bank Nifty Option Strategy for Monthly Income
I hope now you have understood what broken wing butterfly is. Now it's time to share the Bank Nifty Option Strategy for Monthly Income.
In this strategy, I have created below legs:
- Shorted 43200 CE & PE
- Buy 43700 CE & 43100 PE
You can see the difference between the Bought and sold PUTs is low compared to Bought and sold CALLs. That's create a broken wing in Butterly.
Reason to create this strategy lies in the over trend based on chart. Lets look at the chart first then I will share my analysis for Bank Nifty.
If you look at the chart, you will clearly see that after a breakdown from important support i.e. 43600, we saw a sharp decline followed by short covering later.
Now today after a gap-up, we saw short buildup again from important resistance level which was the support earlier i.e. 43600. Now when we knew that trend is completely bearish. we need a strategy in which theta and delta both are in our favour. And that's the reason I choose this strategy.
Adjustments of Bank Nifty Option Strategy for Monthly Income
To adjust this strategy, you can keep 43500 as stoploss. Means square off this strategy if you find that BankNifty is giving a breakout from 43500 on closing basis.
This advanced strategy along with other monthly income strategies is part of our Option Strategies: A Mentorship Program. If you want to learn how one can make passive income through option strategies, must enroll in this unique program.
I will share the adjustments in my premium telegram channel also. To get access to that telegram channel, either you can join the mentorship program where I’m sharing all the option strategies I’m creating every month with timely updates about adjustments. Checks the links below:
In case if you have any query related to this strategy, can type it in the comment box.
Thank you for reading this post. Have a profitable trading!
DISCLAIMER: We are not SEBI research analysts. Views and trading strategies are posted in this weekly market newsletter only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline for interpreting specified analysis methods. This information should only be used by investors and traders aware of the risk inherent in securities trading.