Bank Nifty is trading in a range for last 3 weeks awaiting outcome of Elections across various states and especially UP. Tomorrow after 5.30 pm Exit polls will give some picture about outcome of these elections. Market will react to these Exit polls on Friday!
Strategy for this scenario can be as follows for option trading by buying options:
Buy Put and Call weekly options expiring Mar 16 in equal lot of strike price almost 400-500 points away from spot price of Bank Nifty at around 3-3.15 pm tomorrow. The premiums will be on higher side due to increase in volatility(that's not favorable to buyer of options).
On Friday Bank Nifty likely to open 300 points Gap Up/Down. In that case The option where Index move is favorable may become 2.5-3 times of purchase price while other side option may fall to 0.5-0.25 times of purchase value that should be exited as soon as market opens for trade. But one will get Net profit of 50-100% of capital invested. The option premiums will drop due to drop in volatility but sharp price movement on one side will help to achieve profit.
In case there is no major Gap Up/Down (very Low probability, but can't ruled out), losses would be higher due to reduction in premiums due to drop of volatility and one will have to immediately exit all position at the opening of market.
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