Hello guys, Wishing you Merry Christmas. In this article, I will share the best option strategy we can use in a sideways movement in the index or any particular stock.
As you know, every week I’m trying to share a strategy with the reason behind its formation and the adjustments, we can do if the script starts moving against our prediction.
Today I’m taking PNB for our strategy. I will share, why I choose that stock? reasons behind that strategy and what adjustments we can do if the script starts moving beyond our range?
Since this is a non-directional strategy. So before initiating a strategy, we have to find the range for that particular stock. To find that range I’m using chart and Option chain data.
Option Chain data is giving you a more clear picture. So if you don’t know about technical analysis or how to read charts, it’s perfectly ok. Just follow Open interest and try to find the range.
I will show you, how can we find a range based on Open interest data in this article. So read this article till the end. If you have any questions, you can ask in the comment box. I will try to solve all the questions.
Best Option strategy for a sideways movement in PNB
You can see on the chart, 68 – 70 is the strong resistance zone. Many times PNB reacts to this zone. Same as on downside 60-58 is the strong support zone.
Now based on Chart, We can say that PNB is trading in a range of 70 – 60. Now, let us look at the Open Interest data to crosscheck whether this range is valid or not.
Option chain analysis for PNB
This is January month’s option chain data. If you look at 70 CE & 60 PE, You will find that both strikes carry the highest Open interest that means these are the resistance and support levels based on current data.
70 is acting as a strong resistance level while 60 is acting as a strong support level. Same levels we are getting on charts too. Now you can see both the analysis giving the same (60-70) range.
This is the simplest way to find the range for a particular stock or index. Now if you find that this range is shifting with any movement in the price you too can adjust your position accordingly.
Now you know the range for PNB. So we have to select a strategy which can give us a profit between this range and has a limited risk beyond this range.
Best option strategy for PNB
Iron Condor is the strategy that can give us good profit if PNB will remain in that range(60-70) and It has unlimited risk on both the side. You can see that our breakevens are 59 & 69. So we don’t need to do anything until PNB is trading between this range.
Now, what should be our adjustments if PNB starts moving beyond this range?
You can shift your call spread to 4 points down after a successful breakdown from 59. Means shift you call spread to 64. Same you can do with Put spread after a successful breakout from 70.
You can join our Options Strategies – A Mentorship program to learn some more adjustments in a practical way.
I hope my articles are helping in your profitable trading. If you have any feedback or suggestions please type in the comment box. Your feedback will help me to do something better in the future.
Please type your queries related to a Best options strategy in PNB in the comment box. I will try to answer all your queries.
Much Check this also- A high probability options strategy in YESBANK, Option Buying vs options selling, Modified Condor Option Strategy in VEDL, Bull Call Ladder in ZEEL, Iron Condor in SBIN, Why People Lose Money & Nifty and Bank nifty index analysis with Option Strategy,
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Options Strategies – A Mentorship Program
On the 1st of September, We have launched a new mentorship program for Option strategies, in which we are discussing how can we deploy these strategies? What rules we should follow before taking a trade? and what should be our adjustments if the script is moving against your direction?
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 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.
8+ Years working as a derivative trader, Option Writer, Blogger, Trader by passion, Keen Follower of Indian share market