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.
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.
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.