Hello guys, I hope you are safe and healthy in this Covid-19 pandemic. In this weekly analysis with options strategy post, I’m trying to share what range we can consider before initiating a weekly options strategy for the last week of 2020.
This is my last weekly post of 2020. And I’m highly obliged for the love you gave me this entire 2020 year. This was the best year for me. I have learned so many new things from you all. Achieve some goals and be motivated to do something better in the coming 2021.
This year, I have tried to share so many valuable things that I believe you should follow to be a successful trader in this market. So before we go further I suggest, you should check my previous weekly articles. Here is the link: Replete Bell Weekly
Now, let’s come to our weekly analysis. We saw a good rally in both the indices in the last few weeks. In fact, We can see buying in all the sectors. Nifty IT and Pharma sectors are the top gainers this week.
FIIs are net buyers from the last few months and bought more than 2000cr in the Cash market this week, which is a good sign for this sustainable rally.
As I shared earlier, the overall trend is up, and every dip should be a buying opportunity in this market. Do not trap yourself in a short trade. Always follow your risk management rules.
- 1 Nifty weekly analysis with option strategy
- 2 Banknifty Weekly analysis with option strategy
- 3 Looking for the Best strategy for Bank Nifty Future?
- 4 Options Strategies – A Mentorship Program
Nifty weekly analysis with option strategy
You can see that Nifty is trading at a new all-time high. After nifty gave a breakout from it’s previous all-time high On 9th November, we saw a continious upside rally in the Market.
Although we saw a sharp decline due to negative global sentiments on 21st December but Nifty recover from the low in just 2 trading sessions only. This indicates that the UP Trend is still strong.
Here one thing we should keep in mind. The market is trading at an all-time high, so we can not neglect the possibility of a small correction due to some profit booking. So now it’s more important that we should keep our positions with the proper hedge.
Our medium-term target is 14400 in nifty and I think we might see that level very soon. So go long and invest in some good quality stocks.
On the downside, 12500 – 12000 is still acting as an excellent support zone. We will only short once we got a breakdown from the 12500 to 12000 zone. Let us look at OI data.
Nifty Option Chain analysis
Based on option chain data, the highest Open interest stands at 14000 CE & 13000 PE, followed by 14500 CE & 13500 PE. PCR of all strikes is 1.49, which indicates an overbought market. PCR at 13000 stands at 2.36, which is acting as an immediate support level.
The Put-call ratio at 14000 stands at 0.14, which is acting as a resistance level. Equally, important indicator Option Pain is at 13500, indicating weekly expiry at 13500. A shift in option pain will provide further levels.
Significant open interest buildup on both sides indicating a range-bound activity in the coming week. Based on Option chain data, 13500 & 13000 are the support levels & 14000 & 14500 are the resistance levels for this expiry.
Keep tracking open interest to analyze market participants’ behavior. If you don’t know how to analyze open interest. Just enroll for our Option Strategies – A Mentorship Program.
Nifty Weekly Option Strategy: Iron Condor
Initially, you can keep a stop loss of 13500 & 14000 for this strategy. Means square off if you find nifty is giving a breakout or breakdown. Or you can do this adjustment too.
If you find that Nifty is giving a breakdown and sustaining below 13500, then square off call spread and bring it down to 300 points lower levels.
The same thing you can do with put spread means if you got a breakout from 14000. You can shift your put spread to 300 points up.
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Banknifty Weekly analysis with option strategy
We saw a good rally in bank nifty in last few weeks. Now 32000 – 32500 is acting as a resistance zone, A breakout will lead to a new high in Banknifty.
The Overall trend is UP and there is no sign of weakness in this index. So any short trade would a trap. As you know banknifty is a little extra volatile compared to nifty, so keep your range a little wider in banknifty.
On the downside, 29500 – 29000 is acting as well strong support zone here. Our stop-loss should be below this level. From here, 32000 can be the first target and 33000 can be our second target for a long trade here.
Bank Nifty option chain analysis
Based on option chain data, the highest Open interest stands at 31000 CE & 29000 PE, followed by 30500 CE & 30000 PE. PCR of all strikes is 0.97, which indicates a neutral market. PCR at 29000 stands at 6.28, which is acting as an immediate support level.
The Put-call ratio at 31000 stands at 0.17, which is acting as a resistance level. Equally, important indicator Option Pain is at 30100, indicating weekly expiry at 30100. A shift in option pain will provide further levels.
If you don’t know how to analyze open interest. Just enroll for our Option Strategies – A Mentorship Program.
Bank Nifty Weekly Option Strategy: Iron Condor
Because of the few trading sessions in the coming week, the premium is very low. We are not getting that much of premium. So better take a low-risk strategy. We will square off this strategy if banknifty gives a breakout or breakdown from 32000 – 32500.
To learn the advanced adjustments, you can enroll to our Option Strategies – A Mentorship Program
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DISCLAIMER: – we are not a SEBI research analyst. Views posted in this Weekly Analysis with Options strategy article 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.