Hey Folks! I hope you are safe and healthy in this COVID-19 pandemic. I’m sharing this weekly article every week to share my knowledge and experience with our fellow traders. In this article, you will get nifty and bank nifty weekly analysis and two weekly options strategies that you can deploy in the coming week.
In this article, I’m trying to answer the most commonly asked question too. That means this article doesn’t only help in determining the market trend, but it is also helping to make you a better trader.
One more strong reason to share this weekly article is that It also helps me, actually. I’m too learning from you all, who are sharing their valuable feedbacks and suggestion. Now without wasting your time, let us come to our today’s question.
Which one is the best strategy for nifty and bank nifty weekly expiry options?
Many people ask, “Which one is the best strategy for nifty and bank nifty weekly expiry options?” So here I’m sharing my understanding of this topic in this weekly article. Before I answer this question, let me share something about risk appetite.
I’m a low-risk taker, so whatever I’m doing is based on my own risk-taking capacity. For me, my capital protection is more important than betting with high risk to generate high profit. Our returns are equally proportional to our risk. If the risk is high, the return will also be high. If you are taking a low-risk trade, then you have to satisfy with a low return.
Now when we talk about risk, the question comes to mind that, “how much risk one should take to achieve their goals?” Answers can be different for everyone. So the best way to calculate the risk is by asking yourself, “how much money can you afford to lose.?” No need to calculate anything on paper; ask this simple question to yourself. You will get your answer.
See, the reason for this exercise is: Your trading success depends only on “how you handle your emotions?”. Whatever you calculate on paper will not work until you are unable to implement that in our trading. If your decisions are based on your emotions, that will be a disaster. So the first thing you should do is; keep yourself free from emotions.
And, you can only do that when you are mentally prepared for the risk you are taking. So instead of calculating on paper, ask yourself how much money you can afford to lose. And based on that risk, choose a strategy for you.
Now, as I have said earlier that I’m a low-risk taker. I’m happy if I’m getting a 3-4% monthly return with capital protection. Now if you also think the same then you should create limited risk strategies. Because We don’t need to take a high risk to earn small. Right?
So if you are a low-risk taker and happy with the low return, but capital protection is your priority (which I think we all should focus on first) then these strategies are the best:
- Iron Condor
- Iron Butterfly
- Calendar spreads
- Credit spreads like verticle spreads.
I have seen many people are trading with short straddles or strangle. These strategies can give you a good return if you are in front of the screen all the time and very quickly analyze the data. But if you are not an active trader, I suggest you trade with only limited risk strategies like an iron condor, iron butterfly, etc…
If you want to learn how to earn 3-4% with nominal risk and full protection of your capital, you can enroll in our Mentorship Program. We are giving a huge discount this December 2021 month. Click on the below button to know more:
Nifty weekly analysis and option strategy for 16th December expiry
After a good rally of 1.5 years, We saw some profit booking on the higher levels. In the last bank nifty weekly analysis post, I have shared that “If you follow the Fibonacci retracement tool you would know that this zone (50% – 61.8%) acts as a reversal zone.”
- You can read the complete article here: Click here
Same thing you can see on the chart. Nifty took support between the reversal zone i.e. 16700 – 17050. Now, what next? Is Nifty made a low? or still we may see the downside movement? To understand this, let’s look at the chart below:
Now I draw a Fibonacci extension tool based on current High & Low. You can see that 17511 is the 23.6% level that is playing a major resistance zone for the further upside rally.
A breakout will give you a new BUY signal and you can initiate a new long trade with the current low as a stop-loss.
On the downside, If nifty manages to give a sustainable breakdown from 16700 then we may see some more downside targets. So based on the charts, 16700 & 17500 are the two levels you should keep on the radar.
Only initiate a new trade based on the given levels. If Nifty is not giving any breakout or breakdown then trade with Range-bound strategies only.
Now let us look at the option chain data to find the nifty weekly range for the coming week.
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Nifty weekly options chain analysis
Based on option chain data available at the time of writing this post, the highest Open interest stands at 17500 CE & 17400 PE, followed by 18000 CE & 17200 PE. PCR of all strikes is 0.95, which indicates a neutral market. PCR at 17200 stands at 10, which is acting as an immediate support level.
The Put-call ratio at 17600 stands at 0.17, which is acting as a resistance level. Equally, important indicator Option Pain is at 17450, indicating weekly expiry at 17450. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on the call side. Indicating good pressure from higher levels. So based on the OI, the possible range for this week should be 17200 – 17600.
Keep tracking change in open interest to analyze market participants behavior, so that you can adjust your position accordingly. If you don’t know how to do weekly analysis to find the best Weekly nifty and bank nifty weekly options strategies. Just enroll for our Option Strategies – A Mentorship Program.
Nifty Weekly options Strategies:
Possible adjustments for Nifty options strategies:
Initially, you can keep a stop loss of 17150 & 17650 for this strategy. Means square off if you find nifty is giving a breakout or breakdown. Or you can do this adjustment too. ( Do not hold this strategy is loss is more than 2000₹).
If you find that Nifty is giving a breakdown and sustaining below 17150, then square off the call spread and You can shift your call spread to 300 points down.
You shift your PUT spread to a higher level if you got a breakout from 17650. You can shift your put spread to 300 points up.
If you want to learn how to do nifty weekly analysis to find the Weekly nifty option hedging strategies with adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
Bank Nifty weekly analysis and Option strategy
The almost same setup appears in BankNifty also. Took support in the reversal zone ( 50% – 60%) and now waiting for a breakdown for a fresh long trade.
Based on the Fibonacci extension tool, 38000 is acting as the 23.6% level that is acting as a resistance level for a fresh buy trade. So you should initiate a long trade only above 38000.
On the downside, 34800 is the support level and a breakdown will initiate a new sell trade for further upside levels.
So based on the chart, 34800 & 38000 are the two levels you should keep on the radar.
Bank Nifty weekly options chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 37000 CE & PE, followed by 38000 CE & 36000 PE. PCR of all strikes is 0.84, which indicates a neutral zone. PCR at 36500 stands at 5.21, which is acting as an immediate support level.
The Put-call ratio at 37500 stands at 0.15, which is acting as a resistance level. Equally, the important indicator Option Pain is at 37000, indicating weekly expiry at 37000. A shift in option pain will provide further levels.
If you don’t know how to do the bank nifty weekly analysis to find your bank nifty weekly option hedging strategies, Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty weekly option Strategies: Iron Condor
Possible adjustments for Bank nifty options strategies:
Possible adjustments for this weekly Bank Nifty option Strategies are:
- Follow a stop-loss if the max loss is above 2500₹, close this strategy.
- If you find that Bank Nifty gives a breakdown and sustaining below 36100, then shift your Call spread to 1000 points down. The same thing you can do with put spread means if you got a breakout from 37600. You can shift your put spread to 1000 points up.
If you want to learn these bank nifty option strategies with wanted proper adjustments from my side on a real-time basis can enroll in our Option Strategies – A Mentorship Program.
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*( Please avoid any questions like which Call or Put we should buy in the coming week).
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DISCLAIMER: – we are not a SEBI research analyst. Views or the weekly analysis with nifty and bank nifty weekly options trading strategies posted here 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 to interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.