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Hey folks! I hope you are healthy and safe in this COVID-19 pandemic. Every week I’m trying to share one strategy so that we can earn together. Today I’m sharing a broken wing butterfly option strategy in BHARTIARTL for September 2021 Expiry. Read this post till the end to know the strategy and adjustments.
Before we jump to our strategy, let us understand a few things about the broken wing butterfly options strategy first.
As we know butterfly is a Non-direction limited risk strategy. But when we want to create a limited risk strategy with the directional view, we can choose this strategy.
So, basically, we are shifting our risk from both sides to one side and return from a range to a directional side. The direction could be any, Upside, or downside.
One thing you should keep in mind before deploy any strategy in your account that every strategy has its own limitation. Every strategy comes with its own rules and adjustments.
So, before you deploy any strategy in a live account, you should have a proper understanding of that strategy and its behavior. So spend some time to learn the strategy first. Try to implement with virtual money and once you got enough success and understanding then only you should start with real money.
Broken Wing Butterfly in BHARTIARTL
First step to choose a strategy is analyzing the chart of script. That chart will tell you about the trend and the important support or resistance for coming sessions. Let us look at the chart of BHARTIARTL to find it’s trend.
After gave a breakout from 640 zone, BHARTIARTL is in a complete uptrend. We saw some good buying in this script. So, it can be a good candidate for our broken wing butterfly options strategy.
Based on the chart, 705 & 720 could be the next resistance levels and 580 – 550 is the support zone in BHARTIARTL for the coming sessions.
Let us look at the Open Interest to find the range OI is giving. Based on both the data, we can choose a range and the breakevens for our Options strategy.
Open Interest analysis of BHARTIARTL
Based on the Open interest chart, we can see that 700 is acting as an immediate resistance level and 640 – 620 is acting as an immediate support zone.
Today we can see a huge OI buildup from 650 PE to 680 PE which indicates that people are shifting their positions and creating fresh shorts around 660 PE and 670 PE.
Based on the chart and OI data, we can keep 640 – 650 as our stoploss zone for our directional Broken wing butterfly stratagy in BHARTIARTL.
Broken Wing butterfly Options Strategy in BHARTIARTL.
Possible adjustments for this Options strategy
You can follow the below adjustments for this Broken Wing butterfly options strategy.
- First, you can follow your breakeven i.e 660 – 650 as a stop-loss means you can close your strategy after a breakdown from this zone. Or If the loss is more than 10000₹, close this strategy.
- Now if you get a breakdown from 650, You can shift your 670 CE to 660 CE to collect more premiums.
If you want to learn these option strategies with proper adjustments you can enroll in our Option Strategies – A Mentorship program.
I hope my articles are helping to trade with these options strategies. Which strategy you are using to generate your pay-check? Do let me know in the comment box.
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DISCLAIMER: – we are not a SEBI research analyst. Views and the Broken Wing Butterfly options strategy posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this article 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.