Hey folks! I hope you all are safe and healthy. Many people are asking which one is the best option trading strategy to make money? In today’s weekly newsletter, I will share one strategy which you can deploy to earn consistently. So read this post till the end to get all the references.
When discussing the best option trading strategy, keep in mind that nothing is best until you understand the logic behind any strategy. So, before diving into option strategies, you should first learn the basics of option pricing.
Basics like how option premium is calculated? What are the Greeks? And most important, what is implied volatility? If you know the relation between greeks, implied volatility, and the option premium, it will be easy for you to manage your trade more appropriately.
Another aspect is "Trade management", which is more important than deploying a strategy in your account. Every day, we see a new change because we live in a changing world. Similarly, the market does not remain constant. Every day, a new market trend emerges.
To deal with this type of market, we need to learn the adjustments too. Because if we don’t know how to adjust our strategy if the trend is changing, then it will be difficult for us to make money consistently.
So for the best option trading strategy, we have two requirements:
- A strategy which works most of the time
- Easy trade management or the adjustments if trend/view has changed.
According to my expectations, I require a strategy that will allow me to sleep without stress. An approach that not only gives me a return but also manages my risk. Because I don't want to lose my capital as a result of any market movement caused by news.
I too don't want to squander my quality time with my children because I'm afraid of losing a lot of money due to an unexpected market move. What are your thoughts? Am I expecting too much?
I believe we all want that stress-free approach to generate some consistent money in this market. That’s the reason; I prefer a limited risk strategy that can fulfill my all requirements. Do you know which strategy can meet all our needs?
Right, the best option trading strategy for me is the “Iron Condor option strategy”. Why do I like this strategy very much? I have already shared my requirements in the previous paragraph. Let me share some reasons why I prefer this strategy.
We all know that 70% time market consolidate in a range. That’s means if we initiate a range-bound strategy, 70% accuracy the market itself is giving to us. Rest 30% time, we can make some adjustments to reduce the risk.
In simple words, If I create the same strategy for 12 months. 10 months I’m getting profit due to range-bound activity, and rest two months, I have reduced my risk to breakeven after some adjustments.
- Click here to know more: Iron Condor strategy – A Simple yet effectual approach for a Range-bound stock
So I have a net profit of 10 months. The best part of this strategy is, we can make some simple adjustments to reduce the risk. Don’t you think it’s the right approach for the best option trading strategy to make money consistently?
Now, I have a few questions for you. Think once to give your answer. Don’t you want that stress-free trading? Don’t you want to secure your capital from any unexpected movement in the market? Don’t you want to trade with proper trade management?
If your answers are “YES” and wanted to learn these limited risk strategies with adjustments for your stress-free trading, click on the below button.
Nifty weekly analysis with best option trading strategy
As I have shared in the last weekly newsletter, 19100 - 19000 was the good support zone and nifty needs to break that zone for further downside levels. But Nifty manage to take support near 19200 and gave a reversal.
In the last two weeks, we saw a very good and sustainable rally in the market. Now 19200 - 19000 is acting as a very good support zone, which we can follow as stop loss for this rally.
If you look at the Fibonacci retracement levels, Nifty has breached 19739 which was acting as resistance level. And headed to the further upside level i.e. 20500 for short to medium term target.
The overall trend is UP, and there is no sign of weakness. So keep your long trades open and keep shifting your stop loss to higher levels based on Nifty’s upside movement.
One thing you should keep in mind here that 19991.85 is the all time high that may act as small resistance. So if you are holding a long trade then hold it as it is. For a fresh long trade we should wait a breakout from 20000.
On the downside, 16000 & 15500 are acting as a crucial support levels for this rally in the market. A breakdown from 15500 will lead to some lower levels.
Nifty weekly analysis based on the option chain analysis
Based on option chain data, the highest Open interest stands at 20000 CE & 19600 PE, followed by 19900 CE & 19700 PE. PCR of all strikes is 1.28, which indicates a slightly overbought market. PCR at 19700 stands at 3.8, which is acting as an immediate support level.
The Put-call ratio at 20000 stands at 0.06, which is acting as a resistance level. Equally, important indicator Option Pain is at 19800, indicating weekly expiry at 19800. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on put sides. Indicating that Nifty is facing good support from lower levels and expecting to be in the uptrend only. So based on the OI, the possible range for this week should be 19600 – 20000.
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 to find the best option trading strategy in nifty and bank nifty. Just enroll for our Option Strategies – A Mentorship Program.
Nifty Best option trading Strategy: Iron Condor
Initially, you can keep a stop loss of 19650 & 20050 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 loss is more than 2000₹ with 1 lot).
If you find that Nifty is giving a breakdown and sustaining below 19600, 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 20100. You can shift your put spread to 300 points up.
If you want to learn how to find the best option trading strategy in Nifty and Bank Nifty and its adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
BankNifty weekly analysis with best option trading strategy
Last week we saw that Bank nifty was trading a tight range of 4400 - 44700. But this week, BankNifty has given a good breakout. Although volumes are less but looks sustainable.
Based on the Fibonacci Retracement tool. 45943 level is acting as the next target for this this upside rally. While 44543 is acting as the immediate support here.
If banknifty manage to sustain above 44543 in the coming week then it will give us a good opportunity to go long for a target of 45943 on the Upside.
The current trend in BankNifty is up but on the downside, 43600 is acting as a strong support level here. A breakdown will give us a new sell signal in Banknifty. So If you are holding a long trade, keep your risk management on the higher side.
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BankNifty weekly analysis based on the option chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 46000 CE & 44500 PE, followed by 45500 CE & 45000 PE. PCR of all strikes is 1.34, which indicates an overbought trend. PCR at 44500 stands at 4.14, which is acting as an immediate support level.
The Put-call ratio at 46000 stands at 0.02, which is acting as a resistance level. Equally, important indicator Option Pain is at 45100, indicating weekly expiry at 45100. A shift in option pain will provide further levels.
If you don’t know how to do the banknifty weekly option chain analysis to find your best option trading strategy, Just enroll for our Option Strategies – A Mentorship Program.
BankNifty Best option trading Strategy:
As you knew that BankNifty expiry has been changed to Wednesday from Thursday, so there are few thing we need to check before deploy any strategy in real account.
So this week, I'm just testing few strategies, will share once I optimize these strategies fully. So keep following my future posts to know the new optimized strategy for BankNifty.
If you want to learn this bank nifty best option trading strategy and its 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 Bank Nifty best option trading strategy. You can ask any question related to option trading in the comment box.
If you need More real-time assistance on how to find the Nifty and Bank nifty best option trading strategy, Can take our premium subscription or open a trading account with us and you will get real-time assistance every month on the best option trading strategy. You can contact us on WhatsApp
*( Please avoid any question 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 nifty and bank nifty best option trading strategy 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.