Nifty & Bank Nifty Trading Strategy as on 24 May’13

Nifty as on 23 May’13– 5967.05 (-127.45)    Bank Nifty as on 23 May’13 – 12636.50 (-371.25)

And finally prices moved substantially lower.

At Way2Profits, we are expecting such move and we have mentioned in our last articles also. When you follow Technical Analysis, you actually don’t need to search for reason, reason will follow the suit. Yesterday, it was Nikkei than global cues, anyways.

Nifty Trading Strategy

We were expecting Nifty to turn lower. In last article, I had mentioned that go short below 6070-6065 with immediate target of 5975, which easily came. Now, what next?

Nifty closed at 5967, in the similar range Nifty has support from previous swing high. Now, it is advisable to go short only below yesterday’s low of 5955, for which initial target comes near 5900. From this level, practical stop loss is far, so trader has to follow financial stop loss.

Few of my reader were asking me to give less risky option strategy. For them I would say, it is time to Long Puts, but ride will not be so smooth, as Nifty will move in bits & pieces. If my observation and analysis is right than Nifty should go till 5650-5675 levels, based on that I could say to buy 5700 PUTS. Keep open this position, as there is nothing much to loose  in this strategy.

Nifty Option Strategy (Next Month Expiry)
Strike Price Options Recomm Lot Size Stop Loss
5700 PE 35 50

Bank Nifty Trading Strategy

Patience always pays. I maintained my view to go short on Bank Nifty below 12950 and finally Bank Nifty tumbled till 12594.90.  I think Bank Nifty has potential to go till 12475 from current level and next 12300. Bank Nifty moves with high volatility, so traders who are engaged in Bank Nifty should know how to manage financial stop loss.

Surprising, 12300 PE next month expiry has no volume, so cant suggest option strategy, because in this month’s expiry 12300 PE is trading near 80, and there is a chance that Put will start giving away time value of money.

At Way2Profits, we always give you unbiased view.

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