Hello folks! I hope you are safe and healthy in this highly volatile market. Every week I’m sharing nifty and banknifty option strategy for weekly expiry. I hope these options strategies are helpful to you.
I’m getting many queries through emails and social media platforms about How to select a Nifty and BankNifty option strategy for weekly expiry? In this post, I’m sharing one method. Read this post till the end to know how I’m making this nifty and banknifty option strategy for the weekly expiry.
How to select a Nifty and Banknifty option strategy?
Before we jump to nifty and bank nifty option strategy, first we need to understand, how the market behaves. In my 12+ years of trading career I have observed that Most of the time market trades in a range only. Or you can say:
70% time market trade in a range only and rest 30% time it goes with a trend. So If we focus on that range-bound market. 70% accuracy market itself is giving to us. For the rest 30%, we can manage our trade with adjustments to reduce the risk and increase the profit probability.
So based on the above market behaviour, we have to work on two things:
- How to find a range for nifty and banknifty option strategy?
- How to do the adjustments for options strategies?
How to find a range for nifty and banknifty option strategy?
To find a range of Banknifty option strategy, you can perform a chart analysis or Options chain analysis. I’m using both. First, you can find a range based on the support and resistance on the chart and then confirm it with the option chain analysis.
In the next section (Weekly analysis and Nifty/Banknifty option strategy), I will show you how you can analyze to find a range for nifty and banknifty option strategy.
How do the adjustments for options strategies?
Adjustments are not a topic that you can learn in one or two paragraphs. To understand the adjustments, you have to understand the basics of the option premium. What are the factors that are creating an impact on your option premium?
See, the option premium is an indicator of everything. but if you can understand why your premium will go up or down and most importantly, “How much” then it will give you an extra edge. You can easily calculate important things and it will help to prepare for the plan of action.
You must understand that there is always a logic behind every adjustment. If I say, Shift your put spread to a higher level and you are just following it without knowing the logic behind that adjustment, it will definitely create a problem for you in the future. What will you do when no one is there to assist you? So instead of just following, try to learn the logic behind every action you are taking.
So if you want to know, How to do adjustments in more practical ways then First, learn the basics from the one who is already doing it and try to implement them with the help of your Mentor.
- If you want me as your Mentor then check this: Option Strategies: A Mentorship Program
Weekly analysis with Nifty option strategy
Profit booking continues this week also but somehow Nifty manages to hold its important support level i.e. 14300.
As I have shared in the last Weekly Analysis post, On the downside 19000 - 19100 is acting as the important support zone and a breakdown will trigger a panic selling in Nifty.
Although we saw some highly volatile sessions in the first hour this week but manage to sustain above important support levels. Now the coming week is very crucial for the upcoming session and will decide the further levels.
On the Upside. 19750 which will trigger a long trade again. but as per the setup we are getting on the chart, it looks difficult for the coming week.
The overall trend looks neutral. And let the market gives a clear indication of the trend.
I believe in reaction instead of prediction. Trade with the market, don’t try to be ahead of the market. I know it trills when we beat the market but the probability to make money is low compared to trade with the market.
Let the market give a signal first and based on that signal, plan your trades. As I neutral trader, I suggest trading with credit spreads that have a high probability of success.
Open interest analysis for Nifty option strategy
The highest Open interest stands at 19400 CE & 19300 PE, followed by 19300 CE & 19200 PE, based on option chain data. PCR of all strikes is 0.83, which indicates a neutral market. PCR at 19200 stands at 4.3, which is acting as an immediate support level.
The Put-call ratio at 19400 stands at 0.32, which is acting as a resistance level. Equally, important indicator Option Pain is at 19300, indicating weekly expiry at 19300. 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 side and expecting to be in a range only. So based on the OI, the possible range for this week should be 19200 - 19400.
Keep tracking changes 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 enrol for our Option Strategies – A Mentorship Program.
Nifty option Strategy: Mouce Ear Iron Condor
Initially, you can keep a stop loss of 19050 & 19550 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 if the loss is more than 4000₹).
If you find that Nifty is giving a breakdown and sustaining below 19000, then square off the call spread and bring it down to 300 points lower levels.
The same thing you can do with put spread means if you got a breakout from 19600. You can shift your put spread to 300 points.
Weekly analysis with banknifty option strategy
After a breakdown from 44500 which was acting as good support level earlier, BankNifty is trading in the next range.
Based on the chart, 43300 - 44500 is the range for BankNifty. We can expect a range-bound activity in the coming week because 44300 - 44000 is a strong support zone in BankNifty.
A breakdown will trigger a panic selling but its too early to predict a breakdown because banknifty is trading above this level and there is no sign of weakness.
So for further downside, let it give a clear indication of the breakdown. Till then trade with range-bound strategies only.
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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 44000 CE & 43800 PE, followed by 43900 CE & 43900 PE. PCR of all strikes is 0.94, which indicates a neutral market. PCR at 43500 stands at 4.14, which is acting as an immediate support level.
The Put-call ratio at 44500 stands at 0.13, which is acting as a resistance level. Equally, important indicator Option Pain is at 43900, indicating weekly expiry at 43900. 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: Mouce Ear Iron Condor
If you find that BankNifty gives a breakdown and sustaining below 43200, then Shift your Call spread to 500 points down.
The same thing you can do with put spread means if you got a breakout from 44500. You can shift your put spread to 500 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.
Post your comments in the comment box if you have a query related to the Nifty and BankNifty option strategy. You can ask any question related to option trading in the comment box.
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*( Please avoid any question 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.