Hey Folks! I hope you are safe and healthy in this COVID-19 pandemic. In our weekly newsletter, we are sharing some valuable tips to be a successful trader along with Nifty & Bank Nifty Weekly Options Strategies for the coming week.
In my previous weekly posts, I have shared that we should do proper calculation before entre in any real trade with options. These calculations are based on the Greeks. The option premium itself carries all these calculations.
Change in the value of any greeks will reflect in the change in the premium. We have to learn all the values to know how the option premium of any particular strike will behave with the price movement of that underline asset and the time to expiry.
Many time we saw that our underline asset is moving in our direction but our option premium is going against the movement. This is because of the other greeks like theta or vega, that are playing against your analysis and prediction.
I’m getting so many queries like: I bought 240 Call Option 3 days back with a premium of 4₹ when the stock price was at 225. Now when the price is at 235, my 240 CE strike is trading at 3.5₹. The price of the underline assets ( Stock) is increasing but my 240 call option Premium is not going with the price in fact it is decreasing.
This is because theta is playing against the delta. Recovery in Option premium due to Delta is low compare to the premium decrease by Theta. That’s the reason despite the upside movement in the stock, the option premium is continuously decreasing that results in a net loss. Read the below post for more understanding;
So in simple words, Learn the basics of option premium and start implementing. This is the only way to get success in options trading.
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- 1 Nifty Weekly analysis and Nifty weekly Options strategies
- 2 Bank Nifty Weekly analysis with options strategies
- 3 Highly Rated Best Intraday strategy for Bank Nifty Future
- 4 Options Strategies – A Mentorship Program
Nifty Weekly analysis and Nifty weekly Options strategies
In the last weekly post, I have shared that 15500 – 16000 is the range of Nifty until we are not getting any breakout or breakdown from this range.
Overall trend is UP and there is no sign of weakness as per the chart. In this Upside rally, we can see only few stock are participating. Volumes are not that great but we believe in reacting instead of predicting. So We will react only once we will get a proper buy or sell signal.
As per the chart, 15600 – 16000 is the range for the coming week. Let’s look at Option chain data to find the range for coming week.
Nifty Open interest analysis for Nifty weekly options strategies
Based on option chain data, the highest Open interest stands at 15800 CE & 15800 PE, followed by 15900 CE & 15700 PE. PCR of all strikes is 1.05, which indicates a neutral market. PCR at 15600 stands at 4.75, which is acting as an immediate support level.
The Put-call ratio at 16000 stands at 0.15, which is acting as a resistance level. Equally, important indicator Option Pain is at 15800, indicating weekly expiry at 15800. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on both sides. Indicating that Nifty is facing good support from both the side and expecting to be in a range only. So based on the OI, the possible range for this week should be 15600 – 16000.
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 for nifty and bank nifty weekly Expiry strategy. Just enroll for our Option Strategies – A Mentorship Program.
Nifty weekly options Strategy: Iron Condor
Initially, you can keep a stop loss of15600 – 16000 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 is loss is more than 2400₹).
If you find that Nifty is giving a breakdown and sustaining below 15600, then square off call spread and bring it down to 200 points lower levels.
The same thing you can do with put spread means if you got a breakout from 16000. You can shift your put spread to 200 points up.
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Bank Nifty Weekly analysis with options strategies
From the last many weeks, BankNifty is trading in a range of 34000 – 35800. The more it consolidate in the range the chances of a fall will reduce accordingly. So don’t take any trade in a hurry. As I always said, let banknifty give a clear sign of entry. Till then trade with limited risk strategies only.
On the upside, A successful breakout will give us a good opportunity to go long for a target of 37600. On the downside 30000 is acting as a strong support level and a breakdown will drag BAnknifty again in the territory of the bear.
Right now Bank Nifty is trading near to its crucial resistance level. So we have to follow a proper risk management plan here. I suggest trade with a range-bound strategy only until we are not getting any fresh breakout or breakdown.
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Bank Nifty weekly analysis with option chain data
Based on Bank nifty option chain data, the highest Open interest stands at 35500 CE & 34500 PE, followed by 34700 CE & 34000 PE. PCR of all strikes is 0.74, which indicates a neutral market. PCR at 34000 stands at 10+, which is acting as an immediate support level.
The Put-call ratio at 35000 stands at 0.25, which is acting as a resistance level. Equally, important indicator Option Pain is at 34600, indicating weekly expiry at 34600. A shift in option pain will provide further levels.
If you don’t know how to do the banknifty weekly option chain analysis, Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty weekly expiry Strategy: Iron Condor
If you find that BankNifty gave a breakdown and sustaining below 33800, then Shift your Call spread to 1000 points down.
The same thing you can do with put spread means if you got a breakout from 35200. You can shift your put spread to 1000 points up.
If you want to learn these bank nifty weekly options strategies and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program(50% OFF).
Post your comments in the comment box if you have a query related to the Nifty and Bank Nifty weekly options strategies. You can ask any question related to option trading in the comment box.
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*( Please avoid any questions 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 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.