How do you trade Bank Nifty weekly options?
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Weekly bank nifty options have given distinctive possibilities to trade as futures of bank nifty is still on month-to-month. I trade butterflies which signifies you'd get call of one strike say by way of example 23500 sell two calls of subsequent strike within this example 23600 and get one contact of next strike in this instance 23700. The best element of this approach is your danger reward ratio is minimum 10 occasions to 25 occasions in a single day and it happens just about every week. In my whole life span of 27 years of trading I've under no circumstances skilled this type 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 technique would yield benefits only on Wednesday closing time or Thursday intra day. Every week it really is taking place such as now. The real catch is you should be open to losing the premium you paid.
For freshers or people who can not learn path of the marketplace they're able to buy one put butterfly and one get in touch with butterfly as industry would go either way up or down so your threat reward pretty woukd turn into one will be to 10 which indicates if even once in 10 weeks you hit correct you are in profit and also you will have to start out with only ONE LOT in which even when you buy both call n place butterfly your maximum danger would be much less than 500 ?. As soon as you get confidant you could increase the quantity and finest component of weekly selection is you may have next week to once again trade soon after learning out of your errors.
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 exactly where we calculate the possible selection of bank nifty in one week and we're not concerned which side and would make profit as long as we could calculate array of bank nifty.
So we discussed 3 leg method butterfly and four leg approach box. Apart from this there is two leg strategy. You are able to trade bull spread in which you acquire one get in touch with and sell a further get in touch with with a greater strike and if marketplace moves up you'd make profit irrespective that your value has come or not. Suppose you bought 26000 call and sold 26100call at existing market place cost of say 25600, if marketplace moves from 25600 to 25700 your deal would immediately come in profit despite the fact that it is far off from your choice prices and also you can book profit by closing each the positions as in the event you continue keeping position till expiry you might find yourself losing your complete premium if market place closes under 26000 which includes a very higher probability because it really is nonetheless 300 points away from existing market place price but threat reward ratio is 1:1 so it becomes a lot more riskier in comparison to above two techniques. I am quite danger averse individual and my all trading tactics are with least achievable calculated threat with larger threat to reward ratio.
Very same way you are able to do bear spread in which you'd get a put and sell a put of lower strike cost, If marketplace goes down you'd make money irrespective your cost has reached or not offered you close both the positions just before expiry.
You need not wait till closing to produce profit in all above deals and you Must close the deal just before closing time on thursday otherwise you might end up losing a substantial part of the profit even if your price tag has come as well as your technique proved to become 100% right as a result of differential treatment of security transaction tax on cash settled options wherein you would be necessary to pay stt on plus positions and would not get credit of stt on sell position. By way of example in above circumstance exactly where in you had purchased a bull spread by purchasing 26000 call selection and selling 26100 call option and final expiry is extra than 26100 indicates your max possible profit circumstance has arrived, now in the event you close your both positions on your own and would get 100 rupees but for those who let it expire on its personal you'd find yourself paying stt on 26000 Ce and your profit would drop by 30% on very same situation/ very same cost just due to stt.
Advantage of all these strategies is the fact that you might be not exposed to marketplace as you have got bought and you have sold precise quantity even though different strike, no impact of premium as you trade by paying premium and in the same time by receiving premium so no effect even of time decay. For those who trade selling naked options there is certainly limitless threat linked with that and should you buy naked options you could loose on account of time decay so within this case you happen to be paying and getting both with calculated threat all the time irrespective you get premium or spend and you are well conscious what best/ worst outcome of technique.
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