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Best Reverse Jade Lizard Strategy in BHARTIARTL for October 2020 Expiry

• Updated on: September 23, 2020
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Hey Folks, I hope you are doing good. In today’s article, I’m sharing a high probability Reverse Jade Lizard strategy in BHARTIARTL.

Reverse Jade Lizard strategy has Unlimited risk on Upside. So if you are a beginner, it is important to know the basics and the behaviour of these strategies before entre in real trade.

As I said earlier, the Reverse Jade Lizard strategy has the Unlimited risk on Upside. So we have to choose this strategy if the script is trading near to its resistance and you’re expecting these three conditions:

  • The script will consolidate here,
  • or will give a downside movement,
  • or will give a limited upside movement.

The most important thing you should keep in mind that all your backup plans or adjustments plans must be ready. Means, you should know before entre in this reverse jade lizard strategy that “How will you manage this trade if anything goes wrong?”

This advice is not applicable only for just this strategy; it is valid for all the trades you are placing in your account because your trade management is the only key to success in this market. So keep your backup plans always ready.

Now, These two questions will help to keep plans ready? The first question is: “How this strategy behaves?” and the second one is “What are the adjustments you need to follow?”

Don’t worry I’m sharing the adjustments too in this article. So read this post till the end to understand this strategy and it’s adjustments better. Now let us come to our reverse jade lizard strategy in BHARTIARTL.

Reverse Jade Lizard Strategy in BHARTIARTL

Before we jump to our strategy, let us look at some reasons for Why I choose this strategy in BHARTIARTL. We know it’s an unlimited risk strategy and good if the script is either consolidate or in a bearish mode. To understand the trend of BHARTIARTL, let us look at the chart.

BHARTIARTL Chart

We can see that BHARTIARTL is in a downtrend and very fewer chances to go higher. Based on the chart, there is a very good support zone around 400.

On the UPSIDE, 500 is acting as a good resistance level. SO based on the chart, 400 to 500 is the range for the coming expiry.

Now we can assume that BHARTIARTL will consolidate in a range of 500 – 400. Based on this range, we can make our strategy. Let us look at what Open Interest is saying.

Open interest analysis for BHARTIARTL

BHARTIARTL Support and resistance

Based on the option chain data, there is a huge Open interest buildup around 500 CE. That means 500 is acting as a strong resistance level. Same resistance zone we are getting from the chart too.

On lower side, we have the highest Open interest at 400 PE that means, 400 is acting as a strong support level here.

You should analyze both (Technical & option chain) data to build a conclusive decision. Based on the confirmation, you should select a range for your strategy.

Reverse Jade Lizard strategy in BHARTIARTL

Reverse Jade Lizard strategy in BHARTIARTL

In this strategy, we are selling one OTM call & OTM put. To hedge the downside risk, we are buying one further OTM Put.

You can see in this strategy, we don’t have any risk on the downside and on upside breakeven is 520, which means if BHARTIARTL will expire below 520, we will not lose.

Now above is the scenario based on expiry, but what will happen if BHARTIARTL gave a good upside movement in the next few days? How will you manage it?

Don’t worry, I’m sharing the adjustments too here. You can follow these adjustments.

Possible adjustments for Reverse Jade Lizard strategy in BHARTIARTL

As you know, this is an unlimited risk strategy. If you are a beginner and don’t know how options behave, better you should invest something in your learning first. Instead of giving that money to market, invest it into the learning that will give you lifetime return.

Now when to do the adjustments? First thing you should keep in mind that 500 is our resistance here. If you find a breakout from 500, you should initiate the adjustment I’m sharing below.

After a successful breakout from 500, Buy 520 CE and bring your PUT spread to little higher levels (Around 460/450). That means you should square off existing put spread in profit and initiate a new put spread with higher strike plus buy 520 CE to lock the unlimited risk on the upside.

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

On the 1st of September 2019, 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 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.

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Sachin Sival is the founder and CEO of Replete Equities, an options trading company that specializes in delta hedging. A self-taught trader, Sachin has a passion for volatility trading and stock trading. Sachin loves to hone his skills by reading up on new strategies and techniques as well as taking part in industry events. In addition to being a successful entrepreneur, Sachin also takes pleasure in photography - as a hobby.

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