How to trade Nifty on May 20: Check out strategy, key levels & trade setup

With a likely Nifty trading range for the coming week, a Short Strangle strategy could be an effective way to capitalise on expected consolidation

Recommended Strategy:

• Strategy: Nifty Short Strangle
• Expiry: 22-May-2025
• Strike Prices: Sell 24,000 Put and Sell 25,600 Call
• Net Premium Inflow: 23 points
• Stop Loss: 45
• Target: Entire Premium Inflow

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Rationale:

• Nifty is consolidating after a sharp rally seen over the past few days.
• Immediate key levels: Resistance near 25,500; Support at 24,200.
• Strategy View: With a likely trading range mentioned above for the coming week, a Short Strangle strategy could be an effective way to capitalise on expected consolidation.
• This strategy is profitable if the market remains in a tight range, benefiting from both volatility contraction and Theta decay.

  (Disclaimer: This article is by Sahaj Agrawal, senior vice president, head of derivatives research, Kotak Securities. Views expressed are his own.)