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Hello folks! Hope you are safe and healthy in this COVID-19 pandemic. On our website, I’m sharing some good options strategies, so that all can make money together. Today I’m sharing a Limited Risk Option Strategy in Reliance.
As you know, Market is highly volatile due to US election. So in this highly volatile market, we should focus more on the risk management. We should only trade with some limited risk option strategies.
In today’s article, I’m sharing a limited risk option strategy in Reliance. I’m sharing not only the strategy but sharing adjustments too. So read this post till end to know how we can manage our strategy.
Why I choose Reliance for this Limited risk option strategy?
After a huge fall, we can see Reliance is trading near to its support zones. Due to this big fall, IV has also increased which is giving good premium as credit. To find the levels and the range, we should look at the chart.
After a successful breakdown from 2050, Reliance is trading near to its support levels which are 1800, 1700 and 1600. You can see 1700 – 1600 is the strong support zone and it needs to hold if Reliance wants to recover from here. So, we are keeping this zone (1700 – 1600) as a reference to initiate our strategy.
On the Upside, 2100 – 2200 is acting as a strong resistance zone here. So keeping this as a reference zone for Upper breakeven. Now, Let us look at the Open Interest data to analyze the range.
Reliance Open Interest analysis
Based on the Open interest data, we can see 1800 PE and 2100 CE carries the highest Open interest. This indicates that these levels are acting as immediate support and resistance respectively.
This is confirmed with Open interest that 1800 – 2100 can be the range in RELIANCE for the coming sessions. So, we can use this range to make a limited risk option strategy, i.e. Iron Condor strategy in RELIANCE.
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Limited Risk Option strategy in RELIANCE
Possible adjustments for this limited risk option strategy
You can follow these adjustments:
First, you can follow these breakevens (1685 – 2115) as a stop-loss means you can close your strategy after a breakout or breakdown from this range.
If the loss is more than 5000₹, close this strategy.
Shift your call spread to 1900 after a breakdown from 1685. Means book profit in existing call spread and initiate a new call spread with 1900 CE SELL and 1950 CE BUY.
Same thing you can do with PUT spread after a successful breakout from 2115. Means shift your put spread to 1900 i.e short 1900 PE & BUY 1850 PE
If you want to learn these monthly income 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.
Options Strategies – A Mentorship Program
On the 1st of September 2019, We have launched a new mentorship program for Option strategies, in which we are discussing how can we deploy these strategies? What rules we should follow before taking a trade? and what should be our adjustments if the script is moving against your direction?
DISCLAIMER: – we are not a SEBI research analyst. Views and the limited risk option 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.