Bank Nifty Options Trading Service
Investors and traders in India are well aware that Bank Nifty Options are the most active part of the market. Consistently, we have seen that eight out of the top 10 most active options on any given day are Bank Nifty Options. So there is very strong participation in Bank Nifty Options by both domestic and foreign investors and traders.
Bank Nifty has a higher beta compared to Nifty. So Bank Nifty tends to move about 30% more up and down than Nifty so it also gives you wider swings than Nifty because it’s just one particular industry, which is the banking industry. So the gains and losses on the index are amplified and the options, therefore, tend to move that much more and the options sellers also understand that. And therefore the pricing of Bank Nifty Options is always a bit more expensive than Nifty options.
We have been trading Bank Nifty Options actively for the last four years and it has been getting better and better. So we wanted to share our Bank Nifty Options experience through this service to traders who want to benefit from that. As part of this service, we will only be buying options. We will not be selling Options in this service and therefore, it can be used by traders who have relatively less capital because Option selling requires larger capital. And as you know, the margin requirements have been increased significantly this year by the government.
So Option selling has become even more expensive than last year, and we want to be buyers of Call Options and Put options. Now, various studies have consistently shown that buying options do not always give profit at all. In fact, Option sellers will make a profit of 80% of the time. So when you buy a Call or a Put Option, you will make profit of about 20% of the time only. And that is why Options sellers are there in the market in a big way because they are making profit more consistently, but when they get it wrong, they also make large losses. But otherwise, the data is strongly in their favor that if they keep selling Options regularly, they will make a more consistent income. However, it requires much more capital and that is why all the large funds are selling Options.
We have carefully designed systems that have been helping us in creating Bank Nifty Options on the buy-side. So the 20% window that we have for creating profit by buying Options, we have to leverage that to the maximum possible. So we can’t be expecting to make profits by buying Options whenever we want; that is not the recipe at all. The way to make profits by buying Options is to be very selective on when we will buy an Option.
Our trading systems have consistently shown us those zones where we can make a profit with a higher vulnerability. There can never be a guaranteed profit when we trade Options, they will always be losses. But we have found that we are making profits far more consistently by buying Options, using the trading systems that we have developed for Bank Nifty. And that is what we are sharing as part of this service. So be aware that the trades will not be frequent. We may have maybe three or four trades a month at max, and each trade when we get, it will give about 50% or 100% in gain, but the trades will not be very frequent by the very nature of how we have to be selective and deciding when to buy the Call Option or Put Option. So we will have less frequent trades or those trades will be profitable with a higher probability.
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