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

Indian stock market witnessed a carnage in the first week of October amid selling pressure across the board on weak global cues. The benchmark indices, Sensex and Nifty 50, plunged around 4.5% each last week, recording their worst week in two years.

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

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

“Bank Nifty has taken support from its 20 EMA (Exponential Moving Average) at 51,300 levels. A bounce from the present levels is likely to come, which again is short-lived. All the momentum indicators are in the oversold region, which can also be a reason for a small bounce from present levels,” said Rahul Ghose, CEO of Hedged.in.

On a weekly chart, the Bank Nifty index has closed well below the upper Keltner channel, paving the way for further downside in the coming week. Options writer’s data shows increased writing at 51,500 levels and above both in weekly and monthly expiries, indicating weakness to continue in the index from the present levels, Ghose added.

With the view on the downside, Ghose suggests a low-risk Bank Nifty options strategy from hedged.in which makes money if the Bank Nifty falls below 51,200 by the end of 16th Oct weekly expiry.

Even if the Bank Nifty does move up or sideways, the max risk in the trade is ₹1,000 only, Ghose said.

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

Modified Bearish Butterfly

Trade Structure:

> Buy 1 lot of the 16th Oct expiry 51500 PE at CMP 465

> Buy 1 lot of the 16th Oct expiry 51100 PE at CMP 329

> Sell 2 lots of the 16th Oct expiry 51200 PE at CMP 360

Trade Rules:

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

Trade Modifications:

The trade is protected with a limited risk of ₹1,000 per set, he added.

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