Bank Nifty Strangle
A strangle is an option trade occurs when a trader bets that a stock will rise or fall but isn't sure of the direction and also for a specific range.
A strangle trade consists of the simultaneous purchase of both a put option (betting that the stock price will go down) and a call option (betting the price will go up). Importantly, both the put and the call options must be purchased at the same distance from ATM and have the same expiration date in order to be effective.
Bank Weekly Short Strangle is a income strategy that will help to earn in the range bound market. Below is some description about strategy.
Instrument: Bank Nifty Options
Entry Time : After 9.20 AM
Exit Time : After 3.00 PM
Max Entry : 2 per day
Stop loss: 1000 per trade
Target: 2000 Per trade
Max Loss per day 2000.
We can take 500 away call and put based on the premium available in the market for example we can take 100rs call and 100 put.
We also need to adjust the strangle as per the market movement lets say if bank nifty move 200 point up so close existing strangle and put new one based on the market and vice versa, that will manage the risk and maximize the probability of profit.
Once the stop loss and profit triggered take another trade after one hour that will give some time to settle the market.
As per the historical back testing we can earn 4 to 6% ROI per month and also automate the strategy as per the time and demand.
Happy Trading!
