Hello Friend, As you know the budget session is about to start on February 1st, 2023. In today’s article, I’m sharing Budget Special option strategies for Nifty and Banknifty.
Before we go further, Let me share some important points that we need to keep in mind before taking any trade in the event like budget session.
This type of event will be highly volatile. You may get sharp movement in either direction. So the first thing we need to do is: Keep your risk Limited. Choose a strategy that has limited risk on both sides.
The second step is, Choose a strategy that you can manage well. This means all the adjustments or trading plans should be ready before entre in that particular strategy.
Last but not the least, Diversify your basket. Don’t just deploy the entire capital in one strategy. Keep minimum 3-4 different strategies with different market views. It will help you to minimize the risk and drawdown.
Remember one thing: Profit will not come which strategy you are deploying. Profit will only come, How well you manage your trade.
– Sachin Sival
So your trading plan Or Adjustment should be ready for every situation you may face in the coming sessions.
I’m a low-risk trader, and I usually advise beginners to avoid trading during highly volatile events. So, if you are not an advanced trader and do not know how to manage your trade effectively, you should sit back, relax, and enjoy the day. The budget option strategy I’m sharing here is only for experienced traders.
Range analysis for Option strategy for budget
Let us look at the Nifty chart first:
Before going further, let us look at the chart. You can see that trend is bearish in Nifty and trading between the zone of 17565 – 17817 which is the Fibonacci retracement zone. Normally this zone acts as a reversal but close below this range will generate a short trade for the target of 17205 and 16747.
On the upper side, 18070 – 18382 is acting as an immediate resistance zone and a breakout will change its trend to bullish again. On the downside, 17000 – 17200 is acting as a support zone. So we can say that 17000 – 18000 is the range we can keep on the radar for the coming sessions.
Now lets look at the BankNifty chart:
Almost the same setup you can see in BankNifty also. The short-term trend looks negative but trading in the reversal zone based on the Fibonacci retracement tool. On the downside, 38800 – 37386 is the support zone. While 41567 – 42555 is acting as a resistance zone on the upside.
So in short we can say that 2000 points above or below is the range of BankNifty for coming sessions. We will follow this range to create an option strategy for the budget session.
Open Interest analysis for Nifty and BankNifty
Lets’s look at the Nifty Open interest first:
Based on the 2nd February expiry option chain data, the highest Open interest stands at 18000 CE & 17000 PE, followed by 17800 CE & 17500 PE. PCR of all strikes is 0.60, which indicates a neutral market. PCR at 17000 stands at 10+ which is acting as an immediate support level.
The Put-call ratio at 18000 stands at 0.06, which is acting as a resistance level. Based on Option chain data, 17200, 17000 are good support levels and 17800 & 18000 are good resistance levels for this expiry.
Now look at the BankNifty open interest:
Based on the OI, 39000 is acting as strong support having maximum open interest on the put side, and 42000 is acting as strong resistance. Now we can follow this 39000 – 42000 to create an option strategy for the budget session.
Nifty Option Strategy for Budget Session
I’m deploying calendar spread, Keeping theta and Vega long. You can see our breakeven are 17000 & 18194. We will lose money beyond this range. Here I’m not suggesting any adjustments just keep these levels as a stop-loss. I’m teaching Adjustments of calendar spread in my mentorship program.
If you want to learn these strategies and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
BankNifty Option Strategy for Budget Session
Here you can see that we have a wide range. Our breakevens are 38479 and 43099. Like 2000 points away from the current market price. Risk is very nominal and we can book profit if we are getting a 3-5% return from this strategy. I will also adjust this strategy if bank nifty is breaking my range. You can follow our telegram channel for updates.
Post your comments in the comment box if you have a query related to the
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*( Please avoid any question related to which Call or Put we should buy in the coming week).
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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.