Bank Nifty Trading Strategy: Low-Risk Options Play for October 7 by Rahul Ghose

The Indian stock market saw a major drop in the first week of October, with both Sensex and Nifty 50 falling by around 4.5%, marking their worst performance in two years. On Friday, Sensex dropped 808.65 points to close at 81,688.45, while Nifty 50 fell 235.50 points to finish at 25,014.60.

The Bank Nifty index also fell by 383.15 points, closing at 51,462.05, forming a bearish pattern. However, Rahul Ghose, CEO of Hedged.in, noted that Bank Nifty found support at the 20-day Exponential Moving Average (EMA) around 51,300 levels. He predicts a small bounce but warns that it may be short-lived, as momentum indicators are showing oversold conditions.

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Ghose suggests that Bank Nifty could face further declines in the coming week. He advises a “Modified Bearish Butterfly” options strategy for traders looking to capitalize on a possible fall below 51,200 before the October 16 weekly expiry. Even if Bank Nifty stays flat or rises, the risk is capped at ₹1,000.

Here’s the strategy Ghose recommends:

• Buy 1 lot of 16th Oct expiry 51500 Put Option (PE) at ₹465
• Buy 1 lot of 16th Oct expiry 51100 PE at ₹329
• Sell 2 lots of 16th Oct expiry 51200 PE at ₹360

Key Points:

• Requires ₹43,000 capital.
• Maximum loss is ₹1,000.
• Potential target is 2% to 3% return depending on risk appetite.

This low-risk strategy provides a protected way to trade Bank Nifty options today.