Reverse Jade Lizard option strategy

Reverse Jade Lizard option strategy in BHARTIARTL

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Hey Folks, I hope you are doing good. In today’s article, I’m sharing a high probability Reverse Jade Lizard option strategy in BHARTIARTL.

Reverse Jade Lizard option strategy is an Unlimited risk strategy. So if you are a beginner, it is important to know the basics and the behavior of these strategies before entre in real trade.

As I said earlier, the Reverse Jade Lizard option strategy has the Unlimited risk on Upside. So we have to choose this strategy if the script is trading near to its resistance and you’re expecting that:

  • the script will consolidate here,
  • or will give a downside movement,
  • or will give a limited upside movement.

The most important thing you should keep in mind that all the plans must be ready. Means, you should know before entre in this reverse jade lizard option strategy that “How will you manage this trade if anything goes wrong?”

It’s not applicable only for this strategy; it is valid for all the live trades you are placing in your account because your trade management is the only key to success in this market. Because trade management is the only key to success in this market.

Now, what are the things which will help to keep plans ready? First this is: How this strategy behaves? and What are the adjustments you need to follow?

Don’t worry I’m sharing the adjustments too in this article. So ready this post till the end to understand this strategy better. Now let us come to our reverse jade lizard option strategy in BHARTIARTL.

Why I choose BHARTIARTL for the Reverse Jade Lizard option strategy?

To get the answer of this question we should look at the chart and analyse the option chain data. Let’s start with the BHARTIARTL chart.

Bhartiartl chart today

If you look at the chart, you will find that BHARTIARTL is trading near to its strong resistance level (Which is at 600) and forming a triangle pattern. This indicates that it will consolidate here until we are not getting proper breakout or breakdown from this triangle.

Based on the chart, 600 – 620 is acting as an immediate resistance zone and a breakout will lead to higher levels. On the Downside, 540 – 520 is the support zone.

Now for the confirmation, let us look at the Option chain data of BHARTIATRL for the July 2020 expiry.

Open interest analysis for the Reverse Jade Lizard option strategy in BHARTIARTL

BHARTIARTL Option chain analysis

Based on the option chain data, there is a huge Open interest buildup around 600 CE. That means 600 is acting as a strong resistance level. Same resistance zone we are getting from the chart too.

You should analyze both (Technical & option chain) data to build a conclusive decision. Based on the confirmation, you are getting from both the data, you should select a range for your strategy.

Reverse Jade Lizard option strategy in BHARTIARTL

Reverse Jade Lizard option strategy in BHARTIARTL

In this strategy, we are selling one OTM call & OTM put. To hedge the downside risk, we are buying one further OTM Put.

You can see in this strategy, we don’t have any risk on the downside and on upside breakeven is 631, which means if BHARTIARTL will expire below 631, we will not lose anything.

Now above is the scenario based on expiry, but what will happen if BHARTIARTL gave a good upside movement in the next few days? How will you manage it?

Don’t worry, I’m sharing the adjustments too here. You can follow these adjustments.

Possible adjustments for Reverse Jade Lizard option strategy in BHARTIARTL

As you know, this is an unlimited risk strategy. If you are a beginner and don’t know how options behave, better you should invest something in your learning first. Instead of giving that money to market, invest it into the learning that will give you lifetime return.

Now when to do the adjustments? First thing you should keep in mind that 600 is our resistance here. If you find a breakout from 600, you should initiate the adjustment I’m sharing.

After a successful breakout from 600, Buy 630 CE and bring your PUT spread to little higher levels (Around 560/550). That means you should square off existing put spread in profit and initiate a new put spread with higher strike plus buy 630 CE to lock the unlimited risk on the upside.

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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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 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.

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1 thought on “Reverse Jade Lizard option strategy in BHARTIARTL”

  1. Hi Sachinji,
    Very nice. Such a clean analysis and one of the best suitable strategies. To add further, adjustments ideas to manage the trade.

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