F&O Radar: Ride Nifty’s Bearish Wave with a Bear Put Spread Amid Market Volatility – Expert Chandan Taparia’s Strategy Unveiled

The Nifty Index started Tuesday with a flat opening but quickly fell under bearish control. The selling pressure intensified, and the index dropped below the 24,500 level, closing with a loss of about 310 points at 24,450. This formed a bearish candle, signaling continued weakness in the market.

Key Support and Resistance Levels

According to Chandan Taparia, Senior VP at Motilal Oswal, as long as the Nifty stays below 24,500, there could be further declines toward 24,350 and 24,200 levels. However, on the upside, hurdles are expected around 24,750 and 24,850.

Options Data Analysis

The option data points to a trading range between 24,000 to 25,000, with an immediate focus on 24,300 to 24,700 levels. Maximum Call Open Interest (OI) is seen at the 25,000 and 25,200 strikes, while maximum Put OI is at 24,000 and 23,500 strikes. The writing of Call options is observed at the 24,600 and 24,700 strikes, indicating bearish sentiment, while Put writing is noted at the 24,400 and 24,300 strikes.

Bear Put Spread Strategy

To capitalize on the bearish sentiment, traders can use a Bear Put Spread strategy. This involves buying a higher strike price put option (in-the-money) and selling a lower strike price put option (out-of-the-money). This strategy helps traders limit risk while gaining from a continued downward move in the index.

The payoff for this strategy would come as the Nifty moves lower, with the maximum gain being achieved if the index falls below the lower strike price.