Bank Nifty Trading Strategy Today: How to Trade Bank Nifty Options on October 7? Rahul Ghose suggests this strategy

The Indian stock market witnessed a carnage in the first week of October amid selling pressures across the board due to weak global cues. The benchmark indices, Sensex and ingenious 50plummeted about 4.5% each last week, recording their worst week in two years.

On Friday, the Sensex fell 808.65 points, or 0.98%, to close at 81,688.45, while the Nifty 50 closed 235.50 points, or 0.93%, lower at 25,014.60.

The Bank Nifty index gained 383.15 points, or 0.74%, to close at 51,462.05 on Friday, forming a bearish candlestick pattern.

“Bank Nifty has received support from its 20 EMA (exponential moving average) at 51,300 levels. A bounce from current levels is likely, which will also be short-lived. All momentum indicators are in the oversold region, which can also be a reason for a small bounce from current levels,” said Rahul Ghose, CEO, Hedged.in.

On a weekly chart, the Ingenious bench The index closed well below the upper Keltner channel, paving the way for further declines in the coming week. Options writer data shows higher issuance at levels of 51,500 and above in both weekly and monthly expiries, indicating weakness to continue in the index from current levels, Ghose added.

Taking a bearish view, Ghose suggests a low-risk Bank Nifty options strategy from hedged.in that makes money if the Bank Nifty falls below 51,200 at the end of the weekly expiry on October 16.

Even if the Bank Nifty moves up or sideways, the maximum risk in the trade is $Only 1,000, Ghose said.

Here is Rahul Ghose’s Bank Nifty options trading strategy for today:

Modified Bearish Butterfly

Commercial structure:

> Buy 1 lot expiring on October 16 51500 PE at CMP 465

> Buy 1 lot expiring on October 16 51100 PE at CMP 329

> Sell 2 lots expiring on October 16 51200 PE in CMP 360

Trading rules:

The capital required in trading is $43,000. This trade can be done today if Bank Nifty is trading between 51,500 and 52,000 levels. The maximum loss in trading is $1,000 and the target in the deal should be 2% to 3% of the capital depending on time and individual risk appetite, Ghose said.

Commercial modifications:

The trade is protected with limited risk of $1,000 per game, he added.

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