Here is a Nifty option trade that I plan to initiate on 28-March-2022 for the month of April. This trade will be initiated around 09:30 AM on 28-March or as soon as the initial volatility settles down. Everyone taking the trade may buy at various levels but the strike price mentioned should remain same.
View:
- Overall view for the month of April is bearish to start with. Should recover after second week of the month. We do not need to exactly set any levels here but overall, given the current volatility, Nifty is expected to range between 15000 and 18500. We used range calculator with an estimated vix of 25 to reach this level. Though, vix cannot stay that high for the whole month but overestimating vix for this purpose is always better.
- High volatility is here to stay for April also. Big gap up and down will still be part of game and this trade will remain oblivious to such movements and will not try to take advantage of those.
- This trade will be taken with full month’s view but depending on the market directions, we may close the trade before hand. Will keep on providing updates here as well as in telegram channel as long as the trade is live.
- The trade will not be taken in one go and several new legs will be introduced going forward which will be updated here and in telegram.
The Trade:
On opening of the market of 28th March, we will take the following positions. This is to take benefit from the bearish view of the initial period of the month. Updates and additions will also be provided here and in the telegram channel. The rates will be different for everyone but over a period of one month, that has no relevance.
Possible risks and mitigation:
- This trade is based on a presumed view of the market direction. We may completely go wrong with that direction. In that case, we have to take remaining legs (not mentioned yet) earlier.
- Temporarily such a strategy may show some M2M loss , particularly because of big gap ups/downs, but that should settle down as and when market retraces.
- We may do weekly options sells on top of this base positions, if required. Those will also be mentioned, if required. In March month’s ongoing trade, we did not have to do that.
Closing condition:
- We will try to carry this trade the whole month. Only in case of some unforeseen panic scenario, we will close the trade.
Will put the actual trade in telegram channel against the trade number and also update this post.
Update 28-Mar 3:30PM:
Immediately after taking the position, we are seeing some loss as expected. But, our view of fall in the initial days of April remains intact.
