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Weekly Expiry Nifty

Weekly-Expiry-Nifty

The Weekly Expiry Nifty Strategy is a trading strategy that focuses on taking advantage of the price movements of the Nifty index on its weekly expiry day. This strategy involves analyzing the market trends and using various technical indicators to identify potential entry and exit points for trades. Traders who employ this strategy aim to profit from the volatility and price fluctuations that often occur on the weekly expiry day, which is the last trading day of the week for Nifty options contracts.

Importance of weekly expiry Nifty trading

The weekly expiry days in Nifty trading are significant because they provide traders with an opportunity to capitalize on short-term price movements and market trends. These days often see increased trading activity and liquidity, which can lead to greater profit potential. Additionally, the expiry of options contracts on these days can result in increased volatility, creating more trading opportunities for those utilizing the Weekly Expiry Nifty.

Key Components of the Weekly Expiry Nifty

 

 A. Technical Analysis

  •   Identifying support and resistance levels
  •   Utilizing moving averages for trend analysis
  •   Implementing indicators like RSI or MACD for signal generation

  B. Option Trading Strategies

  •  Call and put option basics
  •  Strategies like long straddle, short straddle, bull spread, bear spread
  •  Importance of analyzing implied volatility for option trading

C. Risk Management

- Setting stop-loss levels for trades

- Determining position sizing based on risk tolerance

- Utilizing trailing stops to protect profits

Nifty Strategy for traders

Iron Butterfly-Neutral Strategy-Iron butterfly option strategy is initiated by an operator when he expects underlying to stay in range with low volatility from the underlying. The strategy is implemented for a credit. The width of the winds in butterfly spread or in other word the spread from the short strike defines the maximum risk for the strategy.

The options trading strategy combines multiple calls and put options. Implementation involves selling at-the-money call and put options or shorting straddle and simultaneously buying OTM option for hedging positions.

The combined credit of the spreads defines the maximum profit for the trade and the maximum risk is defined by the spread width minus the credit received.

Risk:

Max. risk is limited to the spread width minus the premium received

Reward:

Maximum reward is the net premium received from shorting ATM call and put options

Construction

  • Buy 1 OTM Call Option
  • Sell 1 ATM Call Option
  • Sell1 ATM Put Option
  • Buy1 OTM Put Option

Live strategy Implementation-

Nifty is trading at 21680 levels and trader is very bearish on volatility and neutral on index due to Expiry.

  1. Buy 21850 call around 1.9
  2. Sell 21650 put around 21
  3. Sell 21650 call around 47
  4. Buy 21450 put around 2

Maximum profit around 3230 ( 6%) and maximum loss could be around 6770 if there is one side momentum in spot index however probability of profit  could be around 51% as today is Weekly expiry  for Nifty.

For live trade please logon to https://trade.moneysukh.com/. For more details in options category also read https://learn.moneysukh.com/?s=options.

Payoff chart-

Weekly Expiry Nifty-payoff-chart

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