Hey Folks! I hope you are safe and healthy in this COVID-19 pandemic. Keep yourself safe and follow all the guidelines provided by the Government. In this weekly newsletter, I’m sharing some tips or steps you can follow to keep yourself calm for better trade management. Like always, I’m sharing Weekly Options Strategies in Nifty and Banknifty for 1st October 2020 expiry too.
This week was very volatile. I have got so many queries this week about how to manage trades in this highly volatile week.
So read this post till the end to know the tips or steps.
Whenever we hit with a highly volatile week, Our first reaction should be, how to keep ourselves calm? Because we can make some good decisions only if we are calm and disciplined.
But how can we keep ourselves calm when we saw everything is in red? You can follow these steps:
Make a proper trading plan
Before you start your trading with real money, create a proper trading plan with all the entry and exit rules. Proper entry and exit rules will tell you when to react in the market.
I have seen many traders who are trading without a proper trading plan. They are taking trade randomly or based on any advise coming from TV channels or from any friend or relative. The main problem with these advise is: we know when to enter but don’t know when to exit.
When we have taken a trade based on any advice and hit with a highly volatile market, we start our search for the exit routes and till we got our exit routes, either we are sitting with huge loss or missed the exit routes.
That’s the reason you should have a proper trading plan before you enter this market. Your trading plan must have the proper exit routes for any unexpected situation you may face during that trade. Before entre in any trade:
Do not ask what will I do if target meets, ask yourself what will I do if my stop loss hit. How will I come out from a bad trade?
If you have proper entry and exit routes from any unexpected situation, then only you can keep yourself calm. I hope now you understand the importance of a proper trading plan.
Trade with proper Risk Management
I have seen many people are trading based on the targets but not looking at their stop loss. Stop loss will define your risk tolerance situation. Means how much maximum loss you can afford in a trade.
The problem starts when we took a risk which is higher than our Risk tolerance nature. If you saw that risk is high and you can’t afford that loss, then real emotional traps start which is very dangerous for a trader. You may take some bad decisions due to these emotional traps.
So before entry in any trade, always calculate the max risk that trade carries. If you can afford to lose that amount then only you should take that trade.
Remember one this: Not every trade is valid for everyone. We all have our own risk tolerance nature, so we should choose our trade accordingly. A proper risk management plan will not only help to keep yourself calm but will help to survive here for the long term. And as I always say, If you manage to survive here, Profit will come automatically.
What to do when you hit with a highly volatile market?
First thing is keep your calm. And second thing is: figure out how to reduce the risk first. If you want to keep your risk on limited side, you can trade with options hedging strategies.
I’m trading derivatives from last 9+ years. In the first 4 years, I have traded with Futures and then later I have switched to Options strategies. These options strategies are not only helping to keep my risk on limited risk but generating some consistent return too.
If you want to learn and earn through these options hedging strategies can click on below button.
Nifty weekly analysis with Weekly options strategies
After we saw a one-sided movement in nifty, this week we saw some sharp decline from higher levels. Few reasons for this decline are:
- The sharp decline in global indices
- Huge selling by FII’s
- Concern about economic slowdown due to rising cases of COVID-19
Now based on the chart, 10850 – 11100 is the strong support zone. If Nifty manages to sustain above this level, we may see some upside levels. A breakdown will lead to some lower levels. Now if Nifty sustains below 10850 then the next target can be 10550.
Based on the current chart, 10850 – 11200 can be the range for the coming week. One thing we have to keep in mind here that the major reason for this downfall is global indices, so the further decline in Global indices will create pressure on Nifty too.
For medium to long term prospective, trend is still UP and a good opportunity to invest in some quality stocks.
Nifty weekly option chain analysis
Based on option chain data, the highest Open interest stands at 11000 CE & 10600 PE, followed by 11200 CE & 10900 PE. PCR of all strikes is 0.94, which indicates a neutral market. PCR at 10800 stands at 7.27, which is acting as an immediate support level.
The Put-call ratio at 11200 stands at 0.14, which is acting as a resistance level. Equally, important indicator Option Pain is at 11000, indicating weekly expiry at 11000. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on PUT sides. Indicating good support from lower levels. So based on the OI, the possible range for this week should be 10800 – 11200.
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 weekly options Strategy: Iron Condor
Initially, you can keep a stop loss of 10750 & 11250 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 10750, 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 11250. You can shift your put spread to 300 points up.
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Banknifty Weekly analysis with banknifty options strategy
After a sharp decline, we saw BankNifty gave a breakdown from its strong support level i.e. 21000. Now BankNifty is trading below 21000. If manages to sustain below 21000 then we may see 20000 in the coming sessions.
A breakdown from 20000 will again drag Banknifty into the territory of bear. So here 21000 – 20000 is the crucial zone that will decide further levels.
Personally I feel Banknifty will hold this zone (21000 – 20000) but that market, anytime it can surprise you. So trade with some limited risk strategies only.
BankNifty weekly option chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 21500 CE & 20000 PE, followed by 21000 CE & 20500 PE. PCR of all strikes is 0.96, which indicates a neutral zone. PCR at 20000 stands at 10, which is acting as an immediate support level.
The Put-call ratio at 21500 stands at 0.15, which is acting as a resistance level. Equally, important indicator Option Pain is at 20800, indicating weekly expiry at 20800. A shift in option pain will provide further levels.
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BankNifty option Strategy: Iron Condor
Possible adjustments for this best banknifty weekly options strategies are:
If you find that BankNifty gives a breakdown and sustaining below 20300, then shift your Call spread to 800 points down.
The same thing you can do with put spread means if you got a breakout from 21600. You can shift your put spread to 800 points up.
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Post your comments in the comment box if you have a query related to the weekly analysis and Best Nifty and BankNifty 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 weekly analysis with nifty and bank nifty weekly options strategies 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.