Nifty options buying has limited risk but unlimited profit potential, I am going to teach you a trading strategy that can easily multiply your trading capital (money). Before starting with this strategy you need to keep at least Rs. 1,00,000 in your trading account, so that you don’t have to risk much of your trading capital.
Now here first thing to do is start looking at the Nifty futures chart i.e.
Bank Nifty Option Writing Strategy - Share Tips
daily chart, in that chart just see in which direction the market is moving (up or down), If the market is trading sideways then there is no trade. Let us see when the market is up (forming higher tops and higher bottoms series), We will wait for a decent pullback of about 80 to 140 point to participate in that up move.
Whenever that pullback happens, you will need to buy Nifty Call Option, now I am telling how to choose correct strike price for nifty options, just look at this example: If the nifty spot is 10400 then buy nifty 10600 call options i.e. out of money options.
Set target as double of your buy price, stop loss half of your buy price.
Quantities to Buy/Sell:
That was all about buying, now let’s see how much quantities to buy; you will use 40% of your trading capital for buying this nifty option.
So if you have Rs.1,00,000 in your trading account then you will buy nifty options worth Rs.40,000/- before trading with options remember trading options always involve high degree of risk, moreover it’s your hard earned money invest it wisely.
What if you don’t find such opportunities:
If you are unable to find any decent pullbacks in nifty future, then you can always look at its stocks.
There’re 50 stocks in nifty, you can check the daily chart of few of those stocks and surely you will find one/two such stocks every month.
The golden rule of options trading lies in trading in the direction of a medium-term trend if you are buying, or look to go against the trend if you are writing options.
Also, avoid overtrading, as many discounted brokers offer less brokerage.