Hello Friend, How’s your trading going? When we talk about Options Trading, First thing comes in mind is “Risk Management”. Options trading or can say stock trading is all about how you manage your Risk. There is no Holy Grail other than Risk Management in Stock Trading. In this weekly analysis and Option Strategy post, I’m providing you only those strategies which carry limited risk.
This weekly analysis and options strategy post is my effort to come closer and share what I learnt in my trading career. So don’t be shy to post your feedback and suggestions in the comment box. It will help me a lot to provide whatever best I can provide.
- 1 Nifty Weekly Analysis and Option Strategy:
- 2 Bank Nifty Weekly analysis and option strategy
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Nifty Weekly Analysis and Option Strategy:
Nifty Chart this week:
This week was very good for option writers. Most of the time Nifty traded in a range only. After a big downside movement in the last week, Nifty took support around 100 days moving average which is also trendline support. There was a gap between 11650-11450, which has almost filled. So can we expect some reversal from here? 11450-11400 is the strong support zone for Nifty now. On the upper side, 11600-11650 is resistance. Now Nifty is trading in a range of this 200 points, which need to break for further levels. There is still some weakness in RSI & MACD. Option data also suggest limited upside from here. Domestic and Global uncertainty is still there. FIIs are selling continuously. The overall bias is not so strong.
The upside is limited but the downside is fully open. So keep your positions with a proper hedge.
Open Interest Analysis:
Based on option chain data, the highest open interest stands at 11600 CE & 11500 PE followed by 11700 CE & 11600 PE. PCR of all strikes is 0.77 which is a neutral zone. PCR at 11500 stands at 3.9 which is acting as an immediate support level, PCR at 11650 stands at 0.07 which is acting as an immediate resistance level. Equally, important indicator Option Pain is at 11600, indicating expiry at 11600. A shift in option pain will provide further levels.
Based on the Option chain data, Resistance levels are 11600 & 11700 and Support levels are 11500 & 11400. So the expected range based on current data should be 11500 – 11700. There is huge open interest buildup around 11600 CE, 11650 CE, 11700 CE. 11500 PE & 11400 PE also holding good open interest. Excepting to remain in a range in the coming week as per current data.
Nifty Weekly Options Strategy: Iron Butterfly
Adjustments not required for this strategy. Just book loss and close this strategy once it breaches break-even points. If you still want to do some adjustments just shift Call spread to 100 points down after a breakdown from 11500. Keep put spread as it is. Same thing you can do with put spread after a successful breakout from 11700.
Bank Nifty Weekly analysis and option strategy
Bank nifty Chart this week:
Last week after a big downside movement, bank nifty took support around 30500. On Friday we saw some short covering in PSU Banks which lead to this reversal rally in Bank Nifty. But in last hours Banknifty lost all its morning gain and again came to its bearish territory. Now 31150 is the hurdle for Upside Journey. Breakout will lead to higher levels. Overall Trend is looking neutral. RSI & MACD are trying to come in positive territory. Need to watch weather Bank Nifty close above 31150 or not. We should only initiate a Long position only Above 31150. Till then just wait and watch. If you still want to take a risk can place a long position with a stop loss below 30500. There is a gap between 30150 – 29550, which is still open. We should not forget about that too.
BankNifty Open Interest Analysis:
Based on option chain data, the highest open interest stands at 31000 CE & 30500 PE followed by 31200 CE & 30600 PE. PCR of all strikes stands at 0.86 which is a neutral zone. PCR at 30500 stands at 5.11, which is acting an immediate support zone. PCR at 31000 stands at 0.07 which is acting as an immediate resistance zone. Option pain stands at 30700, giving us expiry level. Keep tracking this option pain levels. A shift in option pain will give us a new level for expiry.
Bank Nifty Option strategy: Iron Butterfly
Adjustments not required for this strategy. Just book loss and close this strategy once it breaches break-even points. If you still want to do some adjustments just shift Call spread to 200 points down after a breakdown from 30475. Keep put spread as it is. Same thing you can do with put spread after a successful breakout from 30925.
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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 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.