Hello folks! I hope you are safe and healthy in this Covid-19 pandemic. 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 banknifty option strategy, first we need to understand, how market behaves?. What I have experienced so far in my 9+ years trading career is: 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. In 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 behavior, 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 Option 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 do the analysis to find a range for nifty and banknifty option strategy.
How to do the adjustments for options strategies?
To understand the adjustments, you have to understand the basics of the option premium. What are the factors, which will put some impact on your option premium?
See, the option premium is an indicator of everything. but if you understand why your premium will go up or down and most important, “How much”, It will give you an extra edge. You can calculate things easily that will help to do some proper adjustments.
There is a logic behind every adjustment. If I say, Shift your put spread to higher level and you are following it but don’t know the logic behind that adjustment, somewhere it may create a problem for you, 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 the adjustments? First learn the basics and try to implement it with the help of your Mentor.
- You must check this: Option Strategies: A Mentorship Program
Weekly analysis with Nifty option strategy
In the last Weekly analysis and banknifty option strategy post, I have shared that 11200 – 11400 is the strong resistance zone. If Nifty wants to go higher this zone must be broken.
This week, we saw Nifty is trading in a range of 10900 – 11200. On the lower side, 11000 is playing a very crucial support level a breakdown will lead to 10000, which is a very strong support level for short to medium-term trends.
On the upper side, 11400 – 11500 is the resistance zone. A breakout will lead to further upside levels. Based on the current swing HIGH & LOW, 11350 – 10900 is the range for the coming week.
Just draw a support and resistance level on the chart to find the range of the coming week. Now, let’s compare it with the option chain analysis.
Open interest analysis for Nifty option strategy
Based on option chain data, the highest Open interest stands at 11200 CE & 11000 PE, followed by 11300 CE & 11100 PE. PCR of all strikes is 1.17, which indicates a neutral market. PCR at 11000 stands at 7.19, which is acting as an immediate support level.
The Put-call ratio at 11300 stands at 0.21, which is acting as a resistance level. Equally, important indicator Option Pain is at 11200, indicating weekly expiry at 11200. 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 11000 – 11400.
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 option Strategy: Iron Condor
Initially, you can keep a stop loss of 11000 & 11400 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 11000, 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 11400. You can shift your put spread to 300 points up.
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Weekly analysis with banknifty option strategy
After made a high of 23211.35, We saw some profit booking in Banknifty which drag Banknifty below 22000. Right now BankNifty is trading in a no trade zone.
Over the trend is UP but on the downside, 21000 is acting as a strong support level here. A breakdown will give us anew sell signal in Banknifty. So If you are holding a long trade, keep your risk management on the higher side.
I’m following the Fibonacci Retracement tool. Based on the tool 23000 is the 38.2% level which is very crucial for the further upside levels. A successful breakout will give us a good opportunity to go long for a target of 50% level i.e 24500 on the UPside.
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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 22000 CE & 21500 PE, followed by 23000 CE & 21000 PE. PCR of all strikes is 0.93, which indicates a neutral market. PCR at 21000 stands at 10+, which is acting as an immediate support level.
The Put-call ratio at 22000 stands at 0.16, which is acting as a resistance level. Equally, important indicator Option Pain is at 21600, indicating weekly expiry at 21600. 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 gives a breakdown and sustaining below 21000, 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 22350. 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(33% OFF).
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 or the nifty and banknifty option strategy 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.