Conservative Strategy – 2

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Conservative (NON-DIRECTIONAL) Bank Nifty Option Strategy – 2

This strategy is a bit risky but it gives good rewards. We have to be too strict with the management rules of this strategy, as the loss potential is unlimited.

Trade Entry

We short  2 next series (weekly) BankNifty (BN) options of combined value 1-1.5% of capital on Thursday (weekly expiry day) and hold through the expiry or until our profit target is hit. 1 PE and 1 CE of nearly equal value are shorted. This creates a range of minimum 1200+ keeping the BN spot at the center. It is very unlikely for BN to close beyond that range in a weeks time. As these are weekly options, premium erodes on daily basis irrespective of BankNifty’s movement.

Trade Exit

We Exit from the trade whenever our desired profit is achieved. That gives us about 1-1.5% return from the trade per week.

Trade Management

BN being a highly volatile counter, it moves wildly pretty frequently. This poses significant threat to our positions. Though our strategy is based on a simple fact that BN doesn’t close beyond  and There are 3 managements we do here, never to be overstepped by new inexperienced trader.

i) Once BN starts moving one sided we shift the loss making option to next strike maintaining the original range of 400/500 pts from BN CMP, neutralizing the loss as much as possible. Focus of this action is not to book loss as long as possible. As per our experience generally maximum 2 shifting is possible.

ii) Book profit making option at 70-75% profit and short previous strike option. This will help add to the profit. But do this only when BN moved on sided and loss making option is shifted. Here also maintenance of the range from BN is mandatory. Far is better. Otherwise in case of a reversal there will be a threat to this end also.

iii) Exit from the loosing option when BankNifty crosses 100point to the holding option strike.

NOTE: Experienced traders can modify this strategy by forming complex strategies like different spreads and make it more productive or keep the loss in control. Novice traders if following this strategy, must learn this strategy by paper trading for as long as they don’t feel good. Please don’t alter any of the management strategies described.

Suggestions or queries are most welcome. Please comment or drop us a mail at trademysystem at or WhatsApp to 8653812500 (text only).

DISCLAIMER: These are our views and people like to use this strategy should use at their own risk.

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