Hello Friend, As you know budget session is about to start on February 1st, 2020. In today’s article, I’m sharing a Nifty option strategy for budget session.
Before we going further, Lets me share some important points which we need to keep in mind before taking any trade in the event like budget session.
This type of event will be highly volatile. You may get sharp movement in either direction. So the first thing we need to do is: Keep your risk Limited. Select a strategy which has limited risk.
The second step is, Select a strategy which you can manage well. Means every adjustments or trading plan should be ready before entre any trade. Remember one thing: Profit will not come which strategy you are deploying. Profit will only come, How well you manage your trade. So your trading plan Or Adjustment should be ready for each and every situation you can get in the coming sessions.
I’m a limited
Nifty range analysis for strategy selection
Before going further, Let us look at the chart. You can see 12100 – 12000 is a strong support zone. On 28th January, Nifty tried to break this zone but Couldn’t sustain below.
Second support is around 11800 which is a crucial level in terms of short to medium term trend. On the upside 12450 – 12550 is the strong resistance zone. Nifty need to sustain above this zone for further upside levels.
So here we have a wide range of 11800 – 12550 and based on this range we’ll deploy a strategy.
Open Interest analysis for Nifty option strategy
Based on 6th February expiry option chain data, the highest Open interest stands at 12300 CE & 12000 PE, followed by 12500 CE & 11900 PE. PCR of all strikes is 0.90, which indicates a neutral market. PCR at 12000 stands at 8.49, which is acting as an immediate support level.
The Put-call ratio at 12300 stands at 0.12, which is acting as a resistance level. Based on Option chain data, 12000, 11900 are good support levels and 12400 & 12500 are good resistance levels for this expiry.
Nifty Option Strategy for Budget Session
I’m deploying calendar spread, Keeping theta and Vega long. You can see our breakeven are 11787 & 12632. We will lose money beyond this range. Here I’m not suggesting any adjustments just keep these levels as a stop-loss.
If you want to learn these strategies and their adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program.
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*( Please avoid any question related to which Call or Put we should buy in the coming week).
Options Strategies – A Mentorship Program
On September 01, 2019, We have launched a new mentorship program for Option strategies, in which we’ll discuss 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.