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I hope you all are doing good. As you know we are very closed to our election result, and many asking for a result based strategy. Here I’m sharing one of the safest strategy for this event.
Keep one thing in mind, There is always a certain risk in every trade, no strategy can give you 100% profit only. We just need to focus on how much risk we are caring with any trade. If you know how to adjust your strategy, you can reduce that risk too. So I’m sharing BankNifty Option Strategy for Election Result week with some possible adjustments.
BankNifty Option Strategy for Election Result week: Iron Condor
Reason to create this strategy:
Now as we all know on 19th there are exit polls and on 23rd election results will come. Due to this we’ll get huge volatility in this market. So our first priority should be to keep our Vega neutral. Now after exit polls we’ll get three scenarios, First market will go Up, Second market will go down or it will consolidate in a range only. With this strategy we have limited risk on Upside or Downside.
Let me clear one thing, If you are going to deploy this strategy, You have to be little more active. If you got a breakout on Upside from our break even level(29806) shift your PUT Spread 400 Points up. Means Sell 29200 PE and buy 29000 PE. Same this you have to do with Call Spread if we get a breakdown from 28194. Sell 28800 CE and 29000 CE. Now if you get more such movement in that same direction, Keep shifting your PUT spread if more Upside movement in BankNifty.
In simple words, If Banknifty is going UP, Keep booking profit in PUT Spread and Shift it at above Strikes. On other hand if we got Downside Movement, keep shifting Call Spread to Below Strikes.
*Event Trading is only for aggressive traders, Safe traders can sit and enjoy the every move of market.
Post your comments in the comment box if you have a query related to option strategy. You can ask any question related to options trading in the comment box.
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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.
4 thoughts on “BankNifty Option Strategy for Election Result week”
I have deploy short strangle at 30500 CE @212 and 27400 @208 on Friday.
Is it worthwhile??
Every trade is worthwhile till only it can manage your risk. And for banknifty 1000 point is not a big deal. So better we should keep your risk on limited side.
Thanks for the strategy.
I have quick question, what is your opinion on using straddle option strategy for the result day.
Sir, you didn’t mention which straddle you are taking about. If you are taking about short straddle, than how will you manage your risk with sudden movement in either direction, because your risk will be unlimited. And if you are taking about long straddle than IV always drop very fast once event is over. At that time if you are holding that long straddle than your premium will come down very fast. Because of high Vega decay.