Nifty 50 Trading Strategy: Analysts recommend Bear Put Spread options strategy for 24 February expiry

The Indian stock market indices, Sensex and Nifty 50, traded flat on Tuesday amid mixed global market cues. Gains in IT, FMCG and PSU banking stocks were countered by selling in metals, Oil & Gas and realty stocks.

The benchmark Sensex was up 109.5 points, or 0.13%, at 83,386.70, while the Nifty 50 traded 4.05 points, or 0.02%, higher at 25,686.80.

Infosys, ITC, HCL Technologies, Asian Paints, and Wipro were the top gainers on the Nifty 50 index, while Kwality Wall’s (India), Hindalco Industries, Eternal, Shriram Finance, Tata Steel and Reliance Industries were the top index losers.

In the previous session, Nifty 50 closed 211.65 points, or 0.83%, higher at 25,682.75, and formed a bullish engulfing candle on the daily frame.

Nifty Options Highlights

The highest Nifty Open Interest (OI) on the Call side was at the 26,000 strike, followed by 25,500 which could act as resistance levels. On the Put side, the highest Open Interest was at 25,500 followed by 25,400 which may serve as support levels, said Axis Securities.

The premium for the At-the-Money option is ₹355, indicating a likely trading range for the week between 25,400 and 26,200, it added.

Nifty Options Strategy for 24 February 2025 Expiry

Recommended Strategy: Bear Put Spread

Axis Securities has suggested a Bear Put Spread strategy for Nifty options contracts expiring on 24 February 2025, forecasting a moderately bearish view.

A bear put spread options strategy involves buying a put option and selling another put option with a lower strike price and the same expiration date of the same underlying asset, which is Nifty 50 here. This strategy is used when the view is bearish.

Strategy Details

Buy 1 lot Nifty 25,700 Put at ₹155 - 175

Sell 1 lot Nifty 25,400 Put at ₹75 - 85

Break Even Point: 25,613

The strategy involves buying one lot of the 25,700 strike Put Option and simultaneously selling one lot of the 25,400 strike Put Option.

Risk-Reward Analysis

According to Axis Securities, the maximum potential risk for this Nifty options trading strategy is ₹5,655, whereas the potential maximum reward is ₹13,845.

“Traders may consider deploying this spread strategy to achieve moderate returns while maintaining controlled risk and reward,” said Axis Securities.

The brokerage firm advises traders to enter and exit all the legs in strategy together and square-off the strategy before the expiry session closes.

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.