Weekly bank nifty options have provided exceptional possibilities to trade as futures of bank nifty continues to be on month-to-month. I trade butterflies which means you’d buy call of one strike say for example 23500 sell two calls of subsequent strike in this example 23600 and buy one contact of subsequent strike in this instance 23700. The most effective portion of this tactic is your danger reward ratio is minimum 10 times to 25 occasions in a single day and it takes place each and every week. In my complete life span of 27 years of trading I have never ever seasoned this kind of risk reward ratio wherein your loss is too compact say on lot of bank nifty your worst case scenario loss is 160 rupees to 360 rupees and result in maximum 24 hours or even intra day. This tactic would yield final results only on Wednesday closing time or Thursday intra day. Every week it truly is happening such as currently. The real catch is you should be open to losing the premium you paid.
For freshers or people who can not learn direction on the market they’re able to get one place butterfly and one get in touch with butterfly as market place would go either way up or down so your danger reward pretty woukd grow to be one will be to 10 which means if even as soon as in 10 weeks you hit appropriate that you are in profit and you have to begin with only ONE LOT in which even though you buy each call n put butterfly your maximum risk could be significantly less than 500 ?. Once you get confidant you could raise the quantity and best component of weekly option is you may have next week to once more trade following understanding out of your blunders.
No product ever in Indian market place has generated so much response and no wonder it is actually the the single most product with maximum trading volume every day.
Aside from butterfly I trade box where we calculate the probable range of bank nifty in one week and we are not concerned which side and would make profit provided that we could calculate array of bank nifty.
So we discussed three leg tactic butterfly and four leg tactic box. Aside from this there is two leg method. You are able to trade bull spread in which you get one call and sell a different call with a larger strike and if marketplace moves up you would make profit irrespective that your price tag has come or not. Suppose you purchased 26000 contact and sold 26100call at present market price of say 25600, if market place moves from 25600 to 25700 your deal would immediately come in profit though it truly is far off out of your choice costs and you can book profit by closing both the positions as in case you continue keeping position till expiry you could possibly wind up losing your whole premium if market place closes beneath 26000 which has a quite high probability considering the fact that it really is nevertheless 300 points away from existing marketplace cost but danger reward ratio is 1:1 so it becomes additional riskier in comparison to above two strategies. I’m incredibly risk averse particular person and my all trading techniques are with least doable calculated risk with greater risk to reward ratio.
Same way you’ll be able to do bear spread in which you’d acquire a place and sell a put of reduced strike price tag, If industry goes down you’d make money irrespective your cost has reached or not provided you close both the positions ahead of expiry.
You may need not wait till closing to create profit in all above deals and also you Have to close the deal just before closing time on thursday otherwise you could possibly wind up losing a substantial component of your profit even though your cost has come and your approach proved to be 100% ideal because of differential treatment of security transaction tax on cash settled options wherein you’d be required to spend stt on plus positions and wouldn’t get credit of stt on sell position. One example is in above situation exactly where in you had purchased a bull spread by shopping for 26000 contact solution and selling 26100 get in touch with selection and final expiry is additional than 26100 suggests your max probable profit scenario has arrived, now when you close your each positions by yourself and would get 100 rupees but for those who let it expire on its personal you would find yourself paying stt on 26000 Ce and your profit would drop by 30% on same situation/ similar price tag just on account of stt.
Advantage of all these strategies is that you will be not exposed to market as you’ve bought and also you have sold exact quantity although diverse strike, no impact of premium as you trade by paying premium and at the very same time by receiving premium so no impact even of time decay. In case you trade promoting naked options there’s unlimited risk related with that and in the event you obtain naked options you could possibly loose due to time decay so in this case you might be paying and receiving each with calculated risk at all times irrespective you get premium or spend and also you are properly aware what best/ worst outcome of technique.
This article is copyright free.