Safest Option Hedging Strategy for Weekly Trading

Описание: Safest Option Hedging Strategy for Weekly Trading
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Are you ready to elevate your trading game with a powerful yet disciplined option trading strategy tailored for the Nifty index? In this video, we unpack an advanced Nifty weekly option trading strategy that leverages six strike prices to create a balanced approach—offering the potential for profit whether the market surges upward or plunges downward, all while keeping your risk tightly defined. Whether you’re an intermediate trader looking to refine your skills or an advanced trader seeking a versatile strategy, this video is packed with insights to help you succeed. Let’s dive into the details of this strategy, explore its mechanics step-by-step, and see it in action with a live example.

This Nifty weekly option trading strategy is designed for traders who want to capitalize on market movements with a clear understanding of their risk and reward. Here’s the foundational setup:

Entry Time: Execute this strategy every Friday at approximately 9:30 AM IST, aligning with the opening of the Indian stock market and setting the stage for the upcoming weekly expiration.
Margin Requirement: Approximately Rs 60,000 to 70,000, making it accessible to traders with moderate capital while accounting for the margin needed for short option positions.
Objective: Achieve profits from significant market moves in either direction—up or down—while maintaining a limited risk profile and a defined profit potential.

The 6-Strike Price Structure: Breaking It Down
At the heart of this strategy is a six-strike price framework that combines both put and call options. It’s a multi-leg approach that balances buying and selling options to create a unique payoff profile. Here’s how it’s structured:

Downside Protection (Put Options)
Buy 100 Points OTM PE: Purchase a put option that is 100 points out-of-the-money (OTM) below the current Nifty level. This acts as your initial hedge against a downward move.
Sell 300 Points OTM PE: Sell a put option 300 points OTM below the current level. This generates premium income to offset the cost of your buys and adjusts your risk exposure.
Buy 500 Points OTM PE: Buy another put option 500 points OTM below the current level. This additional long position further defines your risk and enhances the payoff structure on the downside.
Upside Potential (Call Options)
Buy 100 Points OTM CE: Purchase a call option 100 points OTM above the current Nifty level. This positions you to profit from an upward move.
Sell 300 Points OTM CE: Sell a call option 300 points OTM above the current level. The premium collected helps reduce the net cost of the strategy.
Buy 500 Points OTM CE: Buy another call option 500 points OTM above the current level. This caps your risk on the upside and shapes the profit potential.

To make this concrete, let’s walk through a live example with the Nifty at an at-the-money (ATM) level of 25,200. This is where the strategy comes to life:

Current Nifty Level (ATM): 25,200
Expiration: Next week’s Nifty weekly option expiry (typically Thursday).
Downside Setup (Puts)
Buy Nifty 25,100 PE: 100 points below 25,200 (25,200 - 100 = 25,100). This put is slightly OTM and gains value if Nifty falls.
Sell Nifty 24,900 PE: 300 points below 25,200 (25,200 - 300 = 24,900). This short position brings in premium and adjusts your exposure.
Buy Nifty 24,700 PE: 500 points below 25,200 (25,200 - 500 = 24,700). This deeper OTM put limits risk and boosts potential gains if Nifty drops significantly.
Upside Setup (Calls)
Buy Nifty 25,300 CE: 100 points above 25,200 (25,200 + 100 = 25,300). This call profits from a Nifty rally.
Sell Nifty 25,500 CE: 300 points above 25,200 (25,200 + 300 = 25,500). The premium from this sale offsets costs.
Buy Nifty 25,700 CE: 500 points above 25,200 (25,200 + 500 = 25,700). This furthest OTM call defines your upside risk.

*Notes: This is educational content. Trade at your own risk. Past performance ≠ future results. Consult a financial advisor before investing.

*Disclaimer : This video is only for educational purposes, based on research and my own experience, I'm Certified by NSE and SEBI (NISM) About Option Trading Strategies. Share market is very risky if you do anything after watching this video will have their own risk and responsibility; The Stockan Youtube Channel does not take responsibility for any damages arising directly or indirectly from any actions taken based on this video.
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