Today was Bank Nifty Weekly Options Expiry Day!! What a collapse happened in the main Call Option of Bank Nifty, the 22000 CE!! Previous day close 347 and today zero!!
Yesterday morning, this call option had one of the highest open interest (OI) addition that we have seen in a long time at any level, and then it was all closed by end of yesterday with gains. This Call Option went up till about 440 yesterday, and today, it has closed at 0 (zero). Yesterday, all the Call Option sellers were forced to close their position at various losses, and today, the Call Option buyers were forced to close their position in various losses.
We had sold this Call Option yesterday at 285 (which was our profit target), while our buying price was 185 (bought on previous day). Yesterday’s day high was about 440. The lesson here is to take profits once your target is hit, and move out to find another trade, another day. Options near expiry are unforgiving in their movement, because of the large one-way force behind them. Those traders who want to do bulk-trading of cheap options near expiry always have the risk of one big move that will wipe out capital. It keeps happening every month in some week, so be careful. Its far better to work with predefined profit targets in Bank Nifty Options.Thanks.
We were expecting a correction today in Bank Nifty, and we bought only in the last 30 minutes of trading today. The US markets closing today will decide how we perform in India on Monday.
This was the chosen Bank Nifty Call Option for today: CNXBAN-02-Jul-2020-21500-CE.
It was bought yesterday (29 June) at 325 and it was sold today morning at 400 (limit sell order executed within first 15 minutes). Gain of 75 points, or 23% gain. We have bought the same Call Option again at 295 today (30 June) to be sold tomorrow (01 July) between 350-400.Thanks.
Bank Nifty Support Levels are at 21,000. Our Bank Nifty Trading Strategy is to buy on corrections and sell on rallies.
Our chosen Bank Nifty Option for today was the following Call Option: 22000 CE – 02 July 2020 Expiry. This Bank Nifty Call Option was bought yesterday afternoon (between 3:00 to 3:30 pm) at 350, for Target 430, and Stop loss 250. The target came early today morning, giving 80 points gain, or 22% profit.
Our Bank Nifty Call Options Trading Strategy for this week is to trade in 22000 Call Options, which are just 500 points above current price, and therefore, this option will remain relevant as long as Bank Nifty is above 21000. Thanks.
“ICICI Bank – 25 June – 370 Call” was our chosen Option for today. We bought it yesterday at 5.85 and bought again at 4.85 and 3.85 today, to give average price of 4.85, and we sold these options at 5.85 and 6.85 (avg 6.15), giving Rs 1.30 profit on cost price 4.85, or 26% gain. Even if we had not bought more options today, we would have got gain of Rs 1 on cost price of 5.85, or 17% gain.
Trade#1 Summary: Buy at 5.85 for Target 6.85 with Stop loss 3.00
Trade Result: Target hit (in the afternoon), giving 17% gain.
Trade#2 Summary: Buy at 4.85 for Target 6.15 with Stop loss 3.00
Trade Result: Target hit (in the afternoon), giving 26% gain.
21000 CE, 18 June 2020 (Expiry Today)
This was the 2nd Call Option suggested for buying today. Its ultra speculative Call, but at Rs 1.00 was like a cheap lottery ticket that we could try. Why? Because Bank Nifty (BN) had not made a proper upmove in last few days, and lots of failed upmoves had happened, and the base was ready for an upmove today. If BN was falling after a rally, we would not choose this Call.
Buy at 1 for Target 10-20 with Stop loss 0.
Target Hit, giving 10-20X gain.
Notes: This Call Option went up till 54…just imagine! But the capital allocated to it was small, so the amount of gain was also not huge, though percentage gain is high. For Rs 1000 allocated, it gave Rs 10-20K, which is amazing gain. This is not possible every week, but once in 2-3 months, such good setup can come. Thanks.
20500 CE, 18 June 2020 (Expiry Today)
This was the 1st trade of today. Call Option buying was done between 13 and 25, which was day low (just good luck, not repeatable), with avg price 20, and target was 100. We didn’t want to push our luck further, because this Option could easily expire at 0 also.
Buy at 20 for Target 100 with Stop loss 0.
Target Hit, giving 5X gain.
Notes: This Call Option went up till 388…just imagine! The main reason for buying this Call Option was that the technical setup was very attractive for a test of 20,500 level by Expiry today, and it played out. For Rs 5000 allocated, it gave Rs 25K in return, which is amazing gain. But this trade is not possible every week, maybe once in 2-3 months, such good setup can come. Thanks.
Today, we are buying ICICI Bank June 380 Call Option, because ICICI Bank is looking better/stronger than Bank Nifty for a rebound in next 10 days.
The behavior of ICICI Bank is closely matching Bank Nifty and with additional strength — but Bank Nifty Options are more expensive than comparable ICICI Bank call options.
Trade Summary: “Buy ICICI Bank June 380 Call Option at 3.00 for Target 4.00”
— this would give 33% gain, which can come in 2-3 days.
[Trade Update, 16 June 2020]: Target 4.00 was hit right at market start, and this Call Option trade give 33% gain.
We have been trading ICICI Bank Call Options with regular profits since year 2015, and some of our best profitable trades are with ICICI Bank. We are also long-term investors in ICICI Bank ADR listed in the US market (NYSE: IBN).
This was our chosen Call Option for today, decided in the afternoon, based on technical analysis of Bank Nifty index and Option price behavior. Call Option bought at 125 and with target 200 and 225, giving about 60% gain. Because the expiry is tomorrow, we did not load much capital in this trade. The big move happened rapidly in the last 30 minutes.
The best trade in this Call Option would have been from 80 to 120, but we missed that. That was lower risk trade than the trade we finally did from 125 to 200-225.
Technical Analysis: Bank Nifty Resistance Level is at 21,400 and above 21,500 we can see rapid upmove till 22,000.
Today was a volatile day in “Bank Nifty Call Options Trading”. For the last few days, we had been trading with the 21500CE of 11 June 2020 (current week expiry) and it gave use very good gains. We have traded this Call Option from 125 to 400 level.
Our “Bank Nifty Options Trading Strategy” has two components: (1) Decide the short term trend using hourly charts, and (2) Decide the Call or Put option we must trade with while this trend is playing out. This helps rapid decisions in the market because we are trading the same Call or Put for a period of 2-3 days.