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Hello folks! I hope you are safe and healthy in this Covid-19 pandemic. Every week I’m sharing nifty and banknifty option strategy for weekly expiry. I hope these options strategies are helpful to you.
I’m getting many queries through emails and social media platforms about How to select a Nifty and BankNifty option strategy for weekly expiry? In this post, I’m sharing one method. Read this post till the end to know how I’m making this nifty and banknifty option strategy for the weekly expiry.
How to select a Nifty and Banknifty option strategy?
Before we jump to nifty and banknifty option strategy, first we need to understand, how the market behaves?. I have experienced in my 9+ years trading career that Most of the time market trades in a range only. Or you can say:
70% time market trade in a range only and rest 30% time it goes with a trend. So If we focus on that range-bound market. 70% accuracy market itself is giving to us. For the rest 30%, we can manage our trade with adjustments to reduce the risk and increase the profit probability.
So based on the above market behavior, we have to work on two things:
- How to find a range for nifty and banknifty option strategy?
- How to do the adjustments for options strategies?
How to find a range for nifty and banknifty option strategy?
To find a range of Banknifty option strategy, you can perform a chart analysis or Options chain analysis. I’m using both. First, you can find a range based on the support and resistance on the chart and then confirm it with the option chain analysis.
In the next section (Weekly analysis and Nifty/Banknifty option strategy), I will show you how you can analyze to find a range for nifty and banknifty option strategy.
How do the adjustments for options strategies?
Adjustments are not a topic you can learn in one or two paragraphs. To understand the adjustments, you have to understand the basics of the option premium. What are the factors that are creating an impact on your option premium?
See, the option premium is an indicator of everything. but if you can understand why your premium will go up or down and most importantly, “How much” then it will give you an extra edge. You can easily calculate important things and it will help to prepare for the plan of action.
You must understand that there is always a logic behind every adjustment. If I say, Shift your put spread to a higher level and you are just following it without knowing the logic behind that adjustment, it will definitely create a problem for you in the future. What will you do when no one is there to assist you. So instead of just following, try to learn the logic behind every action you are taking.
So if you want to know, How to do the adjustments? First, learn the basics from the one who is already doing it and try to implement them with the help of your Mentor.
- If you want me as your Mentor then check this: Option Strategies: A Mentorship Program
Weekly analysis with Nifty option strategy
After spending almost 6 weeks in a range of 15500 – 15900, Nifty gave a breakout this week. If you remember, I have shared that there is no sign of weakness, and the more it consolidates in a range, the chances will decrease of a fall.
The same thing we have witnessed in the last 3 days. Now 15900 – 16000 become the support zone that was the resistance before. And Nifty has a new range of 16000 – 16450 for the coming week.
Again I’m saying that the overall trend is UP and there is no sign of weakness, so trade is based on the market. I believe in reaction instead of prediction. Trade with the market, don’t try to be ahead of the market. I know it trills when we beat the market but the probability to make money is low compare to trade with the market.
Let the market give a signal first and based on that signal, plan your trades. As I neutral trader, I suggest trade with credit spreads that has a high probability of success.
Open interest analysis for Nifty option strategy
The highest Open interest stands at 11200 CE & 11000 PE, followed by 16300 CE & 16300 PE, based on option chain data. PCR of all strikes is 1.16, which indicates a neutral market. PCR at 16000 stands at 6.12, which is acting as an immediate support level.
The Put-call ratio at 16400 stands at 0.11, which is acting as a resistance level. Equally, important indicator Option Pain is at 16300, indicating weekly expiry at 16300. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on both sides. Indicating that Nifty is facing good support from both the side and expecting to be in a range only. So based on the OI, the possible range for this week should be 16000 – 16400.
Keep tracking change in open interest to analyze market participant’s behavior, so that you can adjust your position accordingly. If you don’t know how to analyze open interest for nifty and bank nifty weekly Expiry strategy. Just enroll for our Option Strategies – A Mentorship Program.
Nifty option Strategy: Iron Condor
Possible adjustments:
Initially, you can keep a stop loss of 16050 & 16450 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 if the loss is more than 2200₹).
If you find that Nifty is giving a breakdown and sustaining below 16000, then square off call spread and bring it down to 300 points lower levels.
The same thing you can do with put spread means if you got a breakout from 16500. You can shift your put spread to 300 points up.
If you want to learn these Nifty and BankNifty option strategy and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
Weekly analysis with banknifty option strategy
Despite a good upside rally, Banknifty is still trading in its previous range. The previous range is till valid until we are not getting any breakout or breakdown.
Based on the chart, 34000 – 36000 is the range for BankNifty. A successful breakout from 36000 will lead to its upside target of 37600 and a breakdown from 34000 will lead to 30000.
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Bank Nifty weekly analysis with option chain data
Based on Bank nifty option chain data, the highest Open interest stands at 36000 CE & 35000 PE, followed by 36500 CE & 35500 PE. PCR of all strikes is 0.89, which indicates a neutral market. PCR at 35000 stands at 10+, which is acting as an immediate support level.
The Put-call ratio at 36500 stands at 0.06, which is acting as a resistance level. Equally, important indicator Option Pain is at 35900, indicating weekly expiry at 35900. A shift in option pain will provide further levels.
If you don’t know how to do the banknifty weekly option chain analysis, Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty weekly expiry Strategy: Iron Condor
Possible adjustments:
If you find that BankNifty gives a breakdown and sustaining below 35000, 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 36500. You can shift your put spread to 1000 points up.
If you want to learn these bank nifty weekly options strategies and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
Post your comments in the comment box if you have a query related to the Nifty and BankNifty option strategy. You can ask any question related to option trading in the comment box.
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*( Please avoid any question like which Call or Put we should buy in the coming week).
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Options Strategies – A Mentorship Program
You have to invest in the best mentors if you want them, well, that’s what we’re offering. With our mentorship program, our world-class professionals explain precisely how options strategies work and teach you everything from advanced strategies to even how adjustments are made when an event happens (something that can happen with any strategy.). Needless to say, this is a must for those wanting more than just rudimentary knowledge of trading securities.
DISCLAIMER: – we are not a SEBI research analyst. Views 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.
