Hey Folks! I hope you are safe and healthy in this COVID-19 pandemic. In our weekly newsletter, we are sharing some valuable tips to be a successful trader along with Nifty & Bank Nifty Weekly Options Strategies for coming week.
Last week I have shared that we should do proper calculation before entre in any real trade with options. These calculations are based on the Greeks. The option premium carries all these calculations.
Change in the value of any greeks will reflect in the change in the premium. We have to learn all the values to know how the option premium of any particular strike will behave with movement and the time in that underline asset.
Many time we saw that our underline asset is moving in our direction but our option premium premium is going againt that movement. This is because of the other greek which is playing againt your analysis and movement.
I’m getting so many queries like: I bought 240 Call Option 3 days back with a premium of 4₹ when the stock price was at 225. Now when the price is at 235, my 240 CE strike is trading at 3.5₹. The price of the underline assets ( Stock) is increasing but my 240 call option Premium is decreasing.
This is because theta is playing against the delta. Option premium increase due to Delta is low compare to the premium decrease by Theta. That’s the reason despite the upside movement in the stock, the option premium is continuously decreasing that results a met loss.
So in simple words, Learn the basics of option premium and start implementing. This is the only way to get success in options trading.
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Nifty Weekly analysis and Nifty weekly Options strategies
Last week, I have share that 11200 – 11400 is the short term target for Nifty. We saw a profit booking after Nifty made a high of 11341.40. Now 10800 & 10500 are acting as a strong support levels. A breakdown from 10500 will give us a new sell signal.
Overall trend is UP and there is no sign of weakness as per the chart. In this Upside rally, we can see only few stock are participating. Volumes are not that great but we believe in reacting instead of predicting. So We will react only once we will get a proper sell signal.
As per the chart, 10500 – 11500 is the range for the coming week. Let’s look at Option chain data to find the range for coming week.
Nifty Open interest analysis for Nifty weekly options strategies
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 0.81, which indicates a neutral market. PCR at 11000 stands at 3.93, which is acting as an immediate support level.
The Put-call ratio at 11300 stands at 0.27, which is acting as a resistance level. Equally, important indicator Option Pain is at 11100, indicating weekly expiry at 11100. 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 – 11500.
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 weekly options Strategy: Iron Condor
Initially, you can keep a stop loss of 10900 & 11300 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 10900, 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 11300. You can shift your put spread to 300 points up.
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Bank Nifty Weekly analysis with options strategies
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 22500 CE & 21000 PE, followed by 22000 CE & 20500 PE. PCR of all strikes is 0.76, 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 0.27, 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 20800, 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 22200. 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 Bank Nifty weekly options strategies. 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 bank nifty weekly expiry 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.