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.

 

Bank Nifty Options Trading 21000CE-18jun2020

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.

Trade Summary:
Buy at 1 for Target 10-20 with Stop loss 0.

Trade Result:
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.