Bank Nifty Options Trading-20Aug2020

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.