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Hello guys, I wish you a happy festive season. Last week I shared an option strategy in ITC. I’m committed to sharing with you what I learnt till now. I will try to share one options strategy every week. Today I’m sharing the Iron condor options strategy in SBIN.
Keep one thing in mind before initiating a strategy, Every strategy has it’s own limitations, its own entry rules, its own behaviour and risk management.
So before selecting a strategy to deploy, you have to understand which strategy will give you the best risk management. Because risk management is the only thing we have to consider for successful trading.
Successful trading is not about just making money, But safeguard your capital in any balck swan event is also successful trading and you don’t know when these events will come, so every next moment can be a black swan event.
Now why I’m telling this? Because we don’t know what will come in the next moment. We should be ready with a backup plan always. Before initiating a trade, all the plans like entry/exit and a backup plan, everything should be ready.
Successful trading is all about how you manage your trade, If you already made a backup plan, you can easily deploy that plan without any manipulation by movement in the market. So always keep the worst conditions you can get in the market and keep ready with your back up plan to deal with that condition.
Now lets come to our Iron condor options strategy in SBIN. Before going deep let’s look at the chart first.
SBIN chart this week
This the weekly chart of SBIN. You can see there is big support zone around 240-235. The movement we were getting in PSUBanks in last few months is quite high.
The same we can see at SBIN chart. We saw a sharp decline from 370 levels in the last few months. Although there was some recovery after Finance minister announces corporate tax relief but you can see in the last two week it digest all the recovery and trading with a new low.
Now the trend is completely down and we may see a new low till 240 to 235. Let’s look at the option chain window to analyse what Open interest is indicating and the reason behind this Iron condor options strategy in SBIN.
Open Interests analysis of SBIN
Based on option chain data, the highest Open interest stands at 300 CE & 230 PE, followed by 290 CE & 250 PE. PCR of all strikes is 0.42, which indicates an oversold market. PCR at 240 stands at 10, which is acting as an immediate support level.
The Put-call ratio at 270 stands at 0.28, which is acting as a resistance level. Equally, important indicator Option Pain is at 265, indicating monthly expiry at 265. A shift in option pain will provide further levels.
In the above chart, you can see there is huge call writing, which indicates a downtrend in SBIN. 240 is acting a support level. So I’m keeping 240-270 as a range to initiate a strategy.
If you don’t know how to analyze open interest. Just enrol for our Option Strategies – A Mentorship Program.
Iron Condor Options Strategy in SBIN
I’m creating an iron condor options strategy in SBIN and keeping a range 240-270 in mind. You can see this strategy is giving decent risk: reward ratio and our breakevens are 238 & 267.
We have to do some adjustment if we got any breakdown or breakout from our breakevens. In this strategy, we have around 9600rs risk which can easily recover by adjustments.
Possible adjustments: Shift your Call spread to one or two strikes below after a successful breakdown. Same you can do with put spread, shift put spread one or two strike above after a successful breakout.
With these adjustments, you can easily collect that 3rs premium you need to close this strategy in no loss no profit.
There are some more adjustments you can do which I’m telling in my Option strategies – A Mentorship Program. If you want to know how I’m creating these strategies to generate some consistent income from options trading, you must enrol this program.
I hope my articles are helping in your profitable trading. If you have any feedback or suggestions please type in the comment box. Your feedback will help me to do something best in future.
Please type your queries related to Iron condor options strategy in SBIN in the comment box. I wish you profitable trading.
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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.