Indian stock market indices, Sensex and Nifty 50, are likely to open higher on Thursday led by positive global cues. The trends on Gift Nifty also suggest a positive opening for the domestic equity market.
Bank Nifty index declined 262.30 points, or 0.51%, to close at 51,010 on Wednesday. The index failed to breach its 50-DMA (Day Moving Average) and saw selling pressure from those levels.
According to Rahul Ghose, CEO of Hedged.in, Bank Nifty is not able to sustain above 51,400 levels, showing weakness in the index. Wednesday’s high of 51,410 is acting as an immediate resistance for the index.
With the view on the downside, Ghose recommends a low-risk Bank Nifty options strategy from hedged.in which makes money if the Bank Nifty falls below 50,826 by the end of next week expiry.
Even if the Bank Nifty does move up or sideways, the max risk in the trade is ₹1,100 only, Ghose said.
Here is Bank Nifty options trading strategy for today by Rahul Ghose:
Modified Bank Nifty Butterfly
Trade Structure:
> Buy 1 lot of the 18th Sep expiry 50900 PE at CMP 294
> Buy 1 lot of the 18th Sep expiry 50500 PE at CMP 165
> Sell 2 lots of the 18th Sep expiry 50600 PE at CMP 193
Trade Rules:
The capital required in the trade is ₹37,600. This trade can be entered if Bank Nifty is trading between the levels of 50,800 and 51,100. The maximum loss in the trade is ₹1,100 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 ₹1,100 per set, Ghose added.
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