Hey folks! How’s your trading going? Every week in this weekly analysis article, we are covering nifty and bank nifty option chain analysis and trying to find the weekly support and resistance with the help of technical charts.
Many peoples, who are following our weekly articles, are asking why you are trading with some range-bound strategies only? Because we all know 70% of times market consolidates in a range only. So we are trading with a range-bound approach, 70% accuracy, market itself giving, for rest 30% we can do the adjustments and can bring our loss to nominal.
One more persuasive reason to follow these non-directional/range-bound strategies is: You know every day something is happening in the market. One day it will go UP, and the next day it will come down. So if you are trading with some directional strategies, you have to be more accurate in terms of trend and direction. Or we can say that you have to be more specific in predicting.
Now. when you are predicting something, there is a 50% probability either the market will go as per your prediction or it will reverse from here. So the changes are 50-50 for every prediction. But if you are following no-directional or range-bound strategies, you don’t need to predict anything. You have just to react based on the data available, and if data is changing, you can adjust your position accordingly.
Let us understand this with an example. Let’s say, you have done bank nifty option chain analysis and find that the range as per the current Open interest is 3000 points (1500 points UP and 1500 points down from the current price). Now, if you are creating a strategy and keeping your breakevens based on this 3000 points range, you don’t need to do anything until Banknifty is trading between this range.
You can keep yourself calm and can focus on your other works. You don’t need to sit in front of the screen to monitor all the actions happening in market. You can just place some price alerts in your app or terminal, and when alert triggered, you can adjust your position accordingly.
Because data is telling everything, data is telling you that now people have started to shift their positions, and you too can do the same. You don’t need to predict anything, just react based on the data, and that’s all. Now you have more probability of success.
Sounds Good? What you think, is it not the easiest approach to generate some consistent money from the market by keeping your risk on a limited side? (Reply in the comment box)
But yes, you have to learn how to read the data. In starting, you may find it a little tricky, but believe me, once you begin implementing, you will find that this is the most natural thing you can do to analyze the trend and range.
- Want to learn how I’m analyzing this data? Want any real-time backend support to implement this data in your trading? You can join our Option Strategies – A Mentorship Program. I’ll be there to assist you with my experience to start trading with these Non-directional/ range-bound strategies with the help of data available to analyze.
Nifty option chain analysis with weekly options strategy
In the last weekly article, I have shared that 15500 is a psychological level, and Nifty should hold this level to go higher. This whole week, we saw a good rally in Nifty and hit our first target of 15770 and heading towards to our next target at 15960.
Now, 15500 is acting as an immediate support level, a breakdown will lead to 15000 that could be a good BUY-on-dips opportunity for the short to medium term. Overall Trend is complete Up so don’t take any contra trade here. For a weekly protective, you can expect 15500 – 16000 as the weekly range for the coming weekly expiry.
As I said earlier in this post that we are range-bound traders. So you can follow the above range to deploy a range-bound strategy for the coming week.
Nifty option chain analysis
Based on option chain data, the highest Open interest stands at 15800 CE & PE, followed by 16000 CE & 15700 PE. PCR of all strikes is 1.20, which indicates a neutral market. PCR at 15600 stands at 5.22, which is acting as an immediate support level.
The Put-call ratio at 16000 stands at 0.22, 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 from 15500 to 16200. Indicating that Nifty is facing good support around 15600 levels and resistance around 16000 levels. So based on the OI, the possible range for this week should be 15600 – 16000.
Keep tracking open interest to analyze market participant’s behaviour. If you don’t know how to analyze open interest for weekly option hedging strategies. Just enrol for our Option Strategies – A Mentorship Program.
Nifty weekly Options Strategy: Iron Condor
Initially, you can keep a stop loss of 15000 & 16000 for this strategy. Means square off if you find nifty is giving a breakout or breakdown. Or you can do this adjustment too.
If you find that Nifty is giving a breakdown and sustaining below 15500, then square off 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 16000. You can shift your put spread to 300 points up.
If you want to learn these Nifty and Bank Nifty options strategies and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program(33% OFF).
Bank Nifty option chain analysis with weekly Option strategy
After given a breakout from 35000, you can see that Bank nifty is trading in a range of 35000 to 36000. As I shared in my last weekly article that 35000 is the strong resistance and it needs to be break if the bank nifty is expecting to go higher.
If you look at the chart, you will find that on the downside 34000 is acting as a strong support level, and on the upside 37700 is acting as a strong resistance level. This can be our range (34000 – 37700) for the short term.
The overall trend is UP so any decline till 34000 can be treat as a buy-on-dips opportunity. We can expect some further upside levels if banknifty manage to sustain above 35000. So these two levels (34000 & 35000) are important for the short to medium term. Right now the market is totally unpredictable so we have to focus more on risk management.
Your risk management for every trade must be properly defined. Do not take any trade which has an unlimited risk on either side. If you are good to analyze trend then you can go with some directional credit spreads like Bear call spread and bull put spread.
Bank Nifty option chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 35500 CE & 35000 PE, followed by 35500 CE & 34500 PE. PCR of all strikes is 0.75, which indicates a neutral market. PCR at 34500 stands at 10+, which is acting as an immediate support level.
The Put-call ratio at 35500 stands at 0.2, which is acting as a resistance level. Equally, important indicator Option Pain is at 35100, indicating weekly expiry at 35100. A shift in option pain will provide further levels.
Remember one thing: When IV is high, data can change anytime so keep following more closely.
If you don’t know how to do the bank nifty option chain analysis, Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty Options Strategy: Iron Condor
If you find that BankNifty gives a breakdown and sustaining below 34400, 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 36000. You can shift your put spread to 1000 points up.
If you want to learn these bank nifty options strategy and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program(33% OFF).
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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.