Bank Nifty Trading Strategy Today: How to trade Bank Nifty options on August 29? Rahul Ghose suggests this strategy

Bank Nifty Trading Strategy Today: Bank Nifty fell below 51,200 level on Wednesday amid profit booking. The index is facing resistance near 51,400 levels and has been witnessing a sluggish move as compared to the benchmark Nifty 50 index.

On Wednesday, Bank Nifty index underperformed the frontline indices and declined 134.90 points, or 0.26%, to close at 51,143.85, forming a small bearish candlestick pattern on the daily charts.

Rahul Ghose, CEO of Hedged.in noted that the Bank Nifty has a sell zone between 51,300 - 52,300 levels. Significant call writing above 51,000 levels indicates a strong resistance at 51,300 and above.

With the view being sideways, Ghose suggests a low-risk Bank Nifty Options strategy which makes money if the index moves down by the end of next week’s expiry or stays sideways.

“What's best about this trading strategy is that, even if the Bank Nifty does move up, the strategy barely loses any money with the risk in the trade being ₹1,000 only,” Ghose said.

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

Bank Nifty Modified Put Butterfly

Trade Structure:

> Buy 1 lot of the 4th September expiry 51000 PE at CMP

> Buy 1 lot of the 4th September expiry 49600 PE at CMP

> Sell 1 lot of the 4th September expiry 50500 PE at CMP

> Sell 1 lot of the 25th September expiry 49500 PE at CMP

Trade Rules:

The capital required in the trade is ₹46,000. This trade can be entered if Bank Nifty is trading between the levels of 51,100 and 51,400. The maximum loss in the trade is ₹1000 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 ₹1000 per set. If Bank Nifty moves above 51,900 levels, the sold legs 50,500 PE and 49,500 PE can be brought up by 100-300 points increasing the credit, to make the trade safer. The trade can be tracked live on www.hedged.in under options strategies, Ghose added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.