Top 5 Bank Nifty Option Strategy
With the growing trading margin requirement as per the SEBI rules(PDF File Below), there has been a significant rise in options trading. Options are now one of the popular derivative instruments. Nifty and bank nifty are the most traded indices for options trading. Another reason for the rise in the bank’s nifty option buying strategy is the amount of opportunity it offers to make money.
In this article, we list down the top 5 bank nifty option strategies.
Bank Nifty Option Strategy
#1. Naked Puts or Calls
When the market is at the low point of the day, a good amount of money can be made by buying a put option. Higher the nifty falls, the higher profits you will make. Similarly, when the market is making a new high, buying a call option is a good strategy. The more the market rises, the more profit you will make. The risk involved in this strategy is the amount of premium paid by you to purchase the put option. Putting a stop loss is compulsory while following this strategy.
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#2. Bull Call Spread
When you believe that the market will rise, you can make a bull call spread. This strategy is useful when you believe that the index will rise significantly. In this strategy, you buy and sell call options to create a spread that a limited loss potential and decent returns. It is a winning strategy as you will good money when the index goes up. The maximum loss in this strategy is already known.
#3. Short Straddle
When you expect the market to be in a defined range, a short straddle is a good strategy. In this strategy, you sell at the money call option and put option with the same strike price and expiry date. When the bank nifty does not show much movement from the defined range you get maximum defined profit. However, when the index moves beyond the breakeven point the losses are unlimited.
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#4. Short Iron Butterfly
Since the risk is unlimited in a short straddle strategy it is often considered a risky strategy. To make the risks limited, a short iron butterfly is a good strategy. Here the losses are lesser and defined. In this strategy, you sell at the money call option and put option with the same strike price and purchase an out-of-money call option and put option in the defined range. The profit in the strategy is also defined and the reward is much higher than the risk.
#5. Bank Nifty 2 PM Strategy
If you are connected with Trading Fuel, you get to learn about the number 1 bank nifty 2 pm option strategy. By reading our informative blogs and articles, you can learn to analyze the movement of bank nifty based on candlestick charts. Depending on the trend and technical analysis of bank nifty, you can make a profitable options trading strategy.
