Weekly Analysis and Options Strategy For the 13th May – 17th May 2019

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Weekly Analysis and Options Strategy For the 13th May – 17th May 2019

This week was very tough for option writers because volatility was very high. I hope you all are doing safe trading with proper risk management.

We saw a sharp decline in all the sectors this week. Nifty and Banknifty closed by – 3.7% & – 3.05% respectively. The main reason for this decline is the US-China trade war. Recent quarterly results of some FMCG companies are also not that impressive. Week volume growth & muted Outlook of these companies (Godrej, Dabur, Britannia etc.) also indicating that something is not well in India’s consumption growth. FIIs which are the most dominant player in the Derivative market also selling huge from last 4 weeks and still carries a huge short position in May expiry.

In addition, of above reasons, there is some uncertainty in election results crude prices also creating some pressure. These are some major reasons due to which we saw a very high Volatility in market.

Nifty 50 IDX: 11278.90Nifty 50 Chart

We can see that Nifty has already broke its trend line support which was around 11322 and trading below from last 2 trading sessions. Volumes are continuously rising which is giving positive indication that bears are not loosing their grip, and we may expect some more downfall from this level. 11200-11000 is a very strong support zone, need to be saved for a new upside rally. A breakdown from 11000 will turn trend completely on downside.


Volatility is very high which shouldn’t be neglected. On 23rd May, we have our election results, till that every trade should be protected with proper hedge. Safe traders can avoid trading in this highly volatile market. As we all know that volatility will act as a double-edged sword, so keep your Vega either neutral or long. Negative Vega will create lots of trouble.

Based on Weekly Option Chain data, the Highest Open stands at 11500CE and 11000 PE followed by 11400 CE & 11200 PE. PCR stands at 0.59 which is a neutral zone. PCR at 11400 is standing at 0.18, which is acting a strong resistance. On lower side PCR at117200 is 3.62, which is acting a strong support level based on current data. An equally important indicator, Option pain stands at 11300, indicating expiry at 11300 levels. A shift in Option pain will give new levels. So keep tracking this Option Pain level.

Nifty Weekly Strategy:Iron Condor

nifty iron condor Options strategy

BankNifty IDX:

BankNifty Weekly Analysis and options strategy

As We shared in our previous Weekly Analysis and options strategy post, 29650 is a strong support level and if we got a breakdown than it may hit 29100 & 28635. 29100 successfully hit this week. Now Banknifty is taking a halt around 29100 level, If manage to sustain below this level than we can expect 28635 in coming sessions or weeks. Once BankNifty hit 28635 than 28635-28155 will act as a retracement zone based on Fibonacci. Medium to long term Trend is still Up. We may expect some pressure in short term due to election results and other reasons.

Based on Weekly Options Chain Data, highest open Interest stands at 29500 CE & 29000 PE followed by 30000CE & 28000 PE. PCR of all strokes stands at 0.61, which is a slightly oversold zone. Based On data, 29200,29300 &  29500 is acting a strong resistance for this week, On lower side 29000 & 28800 is acting short term support levels. Option pain Stands at 29000 levels, which is expecting Expiry level. A shift in Option pain will decide further move. So this week Trading range is 29500-28500 based on current data available.

Banknifty Weekly Strategy: Iron Condor

Iron Condor

*Option strategies required adjustments. Trade only if you know how to do the adjustments to reduce risk.

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Weekly Analysis Options Strategy

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.

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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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