Hello guys. I hope you all are doing good. In this Weekly Newsletter, I’m sharing a market trend based on my analysis and reading. In this post, I’m sharing Nifty and bank nifty weekly Option strategy too. So read this post till the end to know which method I’m using to generate my weekly return and what should be the adjustments if anything goes wrong.
I will share how I’m calculation a range and based on that range which option strategy I’m selecting for the coming week. I’m getting good feedback for this weekly newsletter which is encouraging me to do something better for you.
In this weekly analysis post, I’m trying to share whatever I have learned in my 8 years of a trading career. I hope my experience is helping you to make some better decisions.
In the last few weeks, we saw very high volatility. High volatility is bringing some good opportunities to make good returns but bringing high risk too. So focus more and more on Risk Management right now.
When volatility is high, that means you will get good credit, and it helps to create some high probability non-directional strategy in the market to generate some consistent return. But Your risk must be limited. Otherwise, it will hurt you very badly.
You can see that 70% of the time market consolidates in a range. So If we are creating a non-directional strategy, the Chances to make money is higher than a directional strategy. Because of 70% accuracy, the market itself giving to us.
That’s the main reason I prefer some non-directional strategies most of the time instead of Directional strategies. Now let us look at the chart and option chain data for the coming week to deploy a strategy.
Nifty weekly analysis with option strategy
In the last weekly analysis post, I shared that 4815 & 15196 is the range for nifty. We may see some range-bound activity until nifty is trading between this range.
This week, we saw a breakdown from 14815, and Nifty almost hit our next bearish level (14350) I suggested last week. Now 14350 is acting as a strong support level that will decide the further trend of Nifty.
A breakdown from 14350 will generate a Short signal here. Right now, I’m not holding any trade. A long trade stops out at 14800 with a trailing stop-loss and New short we will initiate after a successful breakdown from 14350. Follow my weekly newsletter, where I will share When I initiate a short trade.
On the Upside, 15200 is acting as the resistance zone, and a breakout will generate a new long signal. So wait for a new buy or sell signal and trade with range-bound strategies till then.
Nifty Option Chain analysis
Based on option chain data, the highest Open interest stands at 16000 CE & 14000 PE, followed by 15000 CE & 14500 PE. PCR of all strikes is 0.90, which indicates a neutral market. PCR at 14300 stands at 10, which is acting as an immediate support level.
The Put-call ratio at 15000 stands at 0.35, which is acting as a resistance level. Equally, the important indicator “Option Pain” is at 14650, indicating weekly expiry at 14650. A shift in option pain will provide further levels.
Significant open interest buildup on PUT sides indicates that the market is trying to take some support from lower levels. Based on Option chain data, 14500, 14300 are good support levels & 14800, 15000 are good resistance levels for this expiry.
Keep tracking open interest to analyze market participants’ behaviour. If you don’t know how to analyze open interest. Just enroll for our Option Strategies – A Mentorship Program.
Nifty Weekly Option Strategy: Iron Condor
Initially, you can keep a stop loss of 14150 & 14900 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 14150, then square off call spread and bring it down to 500 points lower levels.
The same thing you can do with put spread means if you got a breakout from 14900. You can shift your put spread to 500 points up.
Bank Nifty Weekly analysis with option strategy
In the last banknifty weekly option strategy post, I shared that the overall trend is UP in banknifty and there is no sign of weakness. The same we saw this week.
Banknifty was traded in a range of 36500 to 34900 last week and 37000 – 37800 was acting as a powerful resistance zone. A breakout from this level will lead to higher levels. The same levels will apply for the coming week also.
On the downside, 34500 was acted as a strong support level. This week we saw a breakdown from this level and BankNifty is heading towards our next support level at 32700. Right now Banknifty is trading in a range and there is no sign of a buy or a sell trade. So Better trade with a range-bound strategy until we are not getting any breakout or breakdown.
Personally I believe that Banknifty should respect 32700 level and we may see a reversal trend from here. But as we both knows that Market is supreme so we should trade with some limited risk strategies only.
Bank Nifty option chain analysis
Based on option chain data, the highest Open interest stands at 36000 CE & 33000 PE, followed by 35000 CE & 32000 PE. PCR of all strikes is 0.88, which indicates a neutral market. PCR at 33000 stands at 10, which is acting as an immediate support level.
The Put-call ratio at 35000 stands at 0.25, which is acting as a resistance level. Equally, important indicator Option Pain is at 34000, indicating weekly expiry at 34000. A shift in option pain will provide further levels.
If you don’t know how to analyze open interest. Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty Weekly Option Strategy: Broken wing butterfly
Possible adjustments: As you can see it’s a high risk strategy on the upper side. so take this strategy only if you can manage it actively. As soon as Bank Nifty hit and sustain above 36500 you can square off this strategy. If you loss is more than 2500₹. Square off too.
To learn the advanced adjustments, you can enroll to our Option Strategies – A Mentorship Program
Much Check this also- Reverse Jade Lizard option strategy in BHARTIARTL, Bull Call Ladder in ZEEL, Iron Condor in SBIN, Weekly Analysis & Option Strategies For 10th Oct Exp, Why People Lose Money & Nifty and Bank nifty index analysis with Option Strategy, Weekly Analysis and Options Strategy For the 6th May – 10th May 2019, Best Monthly Income Strategy in DIVISLAB for Feb 2021
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DISCLAIMER: – we are not a SEBI research analyst. Views 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 for interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.