Bank Nifty Trading Strategy Today: How to trade Bank Nifty options on October 21? Ganesh Dongre suggests this strategy

Bank Nifty Trading Strategy Today: Indian stock market indices, Sensex and Nifty 50, are likely to begin this week on a cautious note amid mixed global sentiment.

The domestic equity market closed Friday’s session higher, with the Sensex gaining 218 points, or 0.29%, and the Nifty 50 rising 104 points, or 0.42%. The Bank Nifty index outperformed and rallied 805.40 points, or 1.57%, to close above the resistance level of 52,000 at 52,094.20 on Friday.

Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, observed that the Bank Nifty index reached its support zone of 50,000 to 50,500 last week, following sustained selling pressure after a gap-up opening on Monday.

“However, at the end of last week, Bank Nifty recovered back and closed above the resistance zone of 52,000-mark. If Bank Nifty closes daily above 52,000, there is a possibility for upward movement toward the 53,000 - 53,500 resistance zone, which corresponds to the previous weekly high. Key support remains at 50,000, and traders are advised to exercise caution if the index closes below 52,000,” Dongre said.

With the 52,000 being a critical level, Ganesh Dongre suggests a Bank Nifty options trading strategy which works if the index stays above 52,000 during the week.

Here’s Bank Nifty trading strategy for today from Ganesh Dongre:

Bull Call Spread

Trade Structure:

> Buy 1 lot of the 30th Oct expiry 52800 CE at CMP 286

> Sell 1 lots of the 30th Oct expiry 53300 CE at CMP 144

Trade Rules:

The capital required in the trade is ₹20,000. This trade can be entered today if Bank Nifty spot is trading above the levels of 52,000. The maximum profit in the trade is ₹4,800 and the maximum loss will be ₹2,100, said Ganesh Dongre.

The Break-even point is above 52,800, above which he suggests traders to start booking profit near to the resistance level of 53,000 - 53,500. Moreover, as this is a monthly expiry strategy, traders will have two weeks to hold the position; hence, the probability of profit will increase, he added.

The trade is protected with a limited risk of ₹2,100 per lot.

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