Hey folks! I hope you are healthy and safe in this COVID-19 pandemic. Every week I’m trying to share one strategy so that we can earn together. Today I’m sharing a broken wing butterfly option strategy in DLF for September 2021 Expiry. Read this post till the end to know the strategy and adjustments.
Before we jump to our strategy, let us understand a few things about the broken wing butterfly options strategy first.
As we know butterfly is a Non-direction limited risk strategy. But when we want to create a limited risk strategy with the directional view, we can choose this strategy.
So, basically, we are shifting our risk from both sides to one side and return from a range to a directional side. The direction could be any, Upside, or downside.
One thing you should keep in mind before deploying any strategy in your account is that every strategy has its own limitation. Every strategy comes with its own rules and adjustments.
So, before you deploy any strategy in a live account, you should have a proper understanding of that strategy and its behavior. So spend some time learning the strategy first. Try to implement with virtual money and once you got enough success and understanding then only you should start with real money.
Broken Wing Butterfly in DLF
The first step to choose a strategy is analyzing the chart of the script. That chart will tell you about the trend and the important support or resistance for coming sessions. Let us look at the chart of DLF to find its trend.
After being given a breakout from the 360 zones, DLF is in a complete uptrend. We saw some good buying in this script. So, it can be a good candidate for our broken wing butterfly options strategy.
Based on the chart, 430 & 460 could be the next resistance levels and 360 – 350 is the support zone in DLF for the coming sessions.
Let us look at the Open Interest to find the range OI is giving. Based on both the data, we can choose a range and the breakevens for our Options strategy.
Open Interest analysis of DLF
Based on the Open interest chart, we can see that 400 was acting as an immediate resistance level and DLF is trying to break this level to make a new high in the coming sessions. So here we should choose a bullish strategy only and the broken wing butterfly strategy is the best choice here.
Today we can see a huge OI buildup from 340 PE to 380 PE which indicates that people are shifting their positions and creating fresh shorts around 370 PE and 380 PE.
Based on the chart and OI data, we can keep 360 – 350 as our stop loss zone for our directional Broken wing butterfly strategy in DLF.
Broken Wing butterfly Options Strategy in DLF.
Possible adjustments for this Options strategy
You can follow the below adjustments for this Broken Wing butterfly options strategy.
- First, you can follow your breakeven i.e 360 – 350 as a stop-loss means you can close your strategy after a breakdown from this zone. Or If the loss is more than 10000₹, close this strategy.
- Now if you get a breakdown from 350, You can shift your 670 CE to 660 CE to collect more premiums.
If you want to learn these option strategies with proper adjustments you can enroll in our Option Strategies – A Mentorship program.
I hope my articles are helping to trade with these options strategies. Which strategy you are using to generate your pay check? Do let me know in the comment box.
Options Strategies – A Mentorship Program
Learn About Trading Options in a course led by an Industry Expert. It doesn’t matter how old you are, the mentorship program is open to everyone who wants to learn more about the various option trading strategies. You’ll learn everything you need to know about these strategies and more. Don’t wait, Enroll today!
DISCLAIMER: – we are not a SEBI research analyst. Views and the Broken Wing Butterfly options strategy are posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this article 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.