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 10000 is a psychological level, and Nifty should hold this level to go higher. This whole week, we saw that Nifty was trying to stay but couldn’t sustain, and again we slipped below 10000.
Now, 9500 is the strong support level, a breakdown will give a new sell signal and can short below 9500. 9500 – 10300 is no trade zone and a breakout from 10300 will lead to higher levels.
As I said earlier in this post that we are range-bound traders and We need such type of range-bound market. Nowadays IV is high which is giving a good opportunity to initiate some range bound credit spreads.
Nifty option chain analysis
Based on option chain data, the highest Open interest stands at 10000 CE & 9500 PE, followed by 10500 CE & 9000 PE. PCR of all strikes is 0.93, which indicates a neutral market. PCR at 9500 stands at 9+, which is acting as an immediate support level.
The Put-call ratio at 10000 stands at 0.28, which is acting as a resistance level. Equally, important indicator Option Pain is at 9800, indicating weekly expiry at 9800. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on both sides from 9500 to 10000. Indicating that Nifty is facing good support around 9500 levels and resistance around 10000 – 10200 levels. So based on the OI, the possible range for this week should be 9500 – 10000.
Keep tracking open interest to analyze market participant’s behavior. If you don’t know how to analyze open interest for weekly option hedging strategies. Just enroll for our Option Strategies – A Mentorship Program.
Nifty weekly Options Strategy: Iron Condor
Initially, you can keep a stop loss of 9450 & 10050 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 9450, 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 10050. 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
As per the chart, you can see that Bank nifty is trading in a range. As I shared in my last weekly article that 21700 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 18000 is acting as a strong support level, and on the upside 21800 is acting as a strong resistance level. This can be our range (18000 – 22000) for the short term.
We can expect some further levels only after a breakout or breakdown from this zone. 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 21000 CE & 19000 PE, followed by 22000 CE & 19500 PE. PCR of all strikes is 1.02, which indicates a neutral market. PCR at 19500 stands at 5.56, which is acting as an immediate support level.
The Put-call ratio at 21000 stands at 0.18, which is acting as a resistance level. Equally, important indicator Option Pain is at 20000, indicating weekly expiry at 20000. 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 19200, 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 21200. 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 or the nifty and bank nifty option chain analysis and options 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.