Hey folks! I hope you all are safe and healthy in this COVID-19 pandemic. Many people are asking which one is the best option trading strategy to make money? In today’s weekly newsletter, I will share one strategy which you can deploy to earn consistently. So read this post till the end to get all the references.
When we talk about the best option trading strategy, one thing you should keep in mind that nothing is best until you don’t know the logic behind any strategy. So before jump into the option strategies, you should learn the basics first.
Basics like how option premium is calculated? What are the greeks? And the most important, what is implied volatility? If you know the relation between greeks, implied volatility and the option premium, it will be easy for you to manage your trade more appropriately.
Trade management is more important than deploying a strategy in your account. Because we are living in a changing world, every day we will see a new change. In the same way, the market is not the same all the time. Every day we can see a new trend in the market.
In this type of market, we need to learn the adjustments too. Because if we don’t know how to adjust your strategy if the trend is changing, then it will be difficult for us to make money consistently.
So for the best option trading strategy, we have two requirements:
- A strategy which works most of the time
- Easy trade management or the adjustments if trend/view has changed.
As per my expectation, I need a strategy which can give me a stress-free sleep. An approach which is not only giving me some return but managing my risk too. Because I don’t want to lose my capital because of any news based movement in the market. I don’t want to spoil my quality time with kids due to the fear of losing much because of an unexpected move in the market. What you think, M I expecting too much?
I believe we all want that stress-free approach to generate some consistent money in this market. That’s the reason; I prefer a limited risk strategy which can fulfil my all the requirements. Do you know which strategy can meet all our needs?
Right, the best option trading strategy for me is “Iron Condor option strategy”. Why I like this strategy very much? I have already shared my requirements in the previous paragraph. Let me share some reasons why I prefer this strategy.
We all know that 70% time market consolidate in a range. That’s means if we initiate a range-bound strategy, 70% accuracy market itself is giving to us. Rest 30% time; we can make some adjustments to reduce the risk. In simple words, If I create the same strategy for 12 months. 10 months I’m getting profit due to range-bound activity and rest two months, I have reduced my risk to breakeven after some adjustments.
- Click here to know more: Iron Condor strategy – A Simple yet effectual approach for a Range-bound stock
So I have a net profit of 10 months. The best part of this strategy is, we can make some simple adjustments to reduce the risk. Don’t you think it’s a right approach for the best option trading strategy to make money consistently?
Now, I have a few questions for you. Think once to give your answer. Don’t you want that stress-free trading? Don’t you want to secure your capital from any unexpected movement in the market? Don’t you want to trade with proper trade management?
If your answers are “YES” and wanted to learn these limited risk strategies with adjustments for your stress-free trading, click on the below button.
Nifty weekly analysis with best option trading strategy
As I have shared in the last weekly newsletter, 11450 – 11500 was the good resistance zone and nifty needs to break that zone for further upside levels. This week, we saw a very good and sustainable rally in market. Now 11450 – 11500 is acting as a very good support zone, which was a resistance previously.
If you look at the Fibonacci retracement levels, 12450 is the target now. Recent swing low 11100 can be our stoploss for short term trade here.
The overall trend is UP, and there is no sign of weakness. So keep your long trades open and keep shifting your stop loss to higher levels based on Nifty’s upside movement.
On the downside, 11000 is acting as a crucial support level for this rally in market. A breakdown from 11000 will lead to some lower levels.
Nifty weekly analysis based on the option chain analysis
Based on option chain data, the highest Open interest stands at 12000 CE & 11500 PE, followed by 11600 CE & 11600 PE. PCR of all strikes is 1.39, which indicates a slightly overbought market. PCR at 11500 stands at 2.52, which is acting as an immediate support level.
The Put-call ratio at 11800 stands at 0.10, which is acting as a resistance level. Equally, important indicator Option Pain is at 11600, indicating weekly expiry at 11600. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on put sides. Indicating that Nifty is facing good support from lower levels and expecting to be in the uptrend only. So based on the OI, the possible range for this week should be 11500 – 12000.
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 fo find best option trading strategy in nifty and bank nifty. Just enroll for our Option Strategies – A Mentorship Program.
Nifty Best option trading Strategy: Iron Condor
Initially, you can keep a stop loss of 11450 & 11850 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 1500₹).
If you find that Nifty is giving a breakdown and sustaining below 11450, 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 11850. You can shift your put spread to 300 points up.
If you want to learn how to find best option trading strategy in Nifty and Bank Nifty and its adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
BankNifty weekly analysis with best option trading strategy
This week, we saw a perfect breakout in Banknifty. Banknifty broke its range of 23200 – 21000 and managed to sustain above this range. Now, what next?
Based on the Fibonacci retracement tool, 24300 and 26300 are 50% and 61.8% retracement levels. Usually, this zone acts as a reversal zone. And we saw a reversal from this zone based on the historical chart.
The overall trend is UP, and there is no sign of weakness, so a long trade is only advisable here. Now, if we talk about the next levels, 24300 is the first resistance here, and if the bank nifty manage to sustain above 24300, our next target should be 26300.
On the downside, 21000 is acting as a crucial support level, and a breakdown from 21000 will drag bank nifty in the territory of bears again, which I’m not expecting atleast not in the short term.
BankNifty weekly analysis based on the option chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 25000 CE & 23500 PE, followed by 25500 CE & 24000 PE. PCR of all strikes is 1.39, which indicates an overbought zone. PCR at 23500 stands at 3.36, which is acting as an immediate support level.
The Put-call ratio at 25000 stands at 0.03, which is acting as a resistance level. Equally, important indicator Option Pain is at 24000, indicating weekly expiry at 24000. A shift in option pain will provide further levels.
If you don’t know how to do the banknifty weekly option chain analysis to find your best option trading strategy, Just enroll for our Option Strategies – A Mentorship Program.
BankNifty Best option trading Strategy: Iron Condor
Possible adjustments for this best option trading strategy in banknifty are:
If you find that BankNifty gives a breakdown and sustaining below 23500, 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 25000. You can shift your put spread to 1000 points up.
If you want to learn this bank nifty best option trading strategy and its 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 Bank Nifty best option trading strategy. You can ask any question related to option trading in the comment box.
If you need More real-time assistance on how to find the Nifty and Bank nifty best option trading strategy, Can take our premium subscription or open a trading account with us and you will get real-time assistance every month on the best option trading strategy. You can contact us on WhatsApp
*( Please avoid any question like which Call or Put we should buy in the coming week).
Options Strategies – A Mentorship Program
On September 01, 2019, We have launched a new mentorship program for Option selling strategies, in which we’ll discuss how can we deploy these Options strategies? What rules we should follow before taking a trade? And what should be our adjustments if the script is moving against your prediction?
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DISCLAIMER: – we are not a SEBI research analyst. Views or the nifty and bank nifty best option trading 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.