Sahaj Agarwal of Kotak Sec says 'Short Strangle' ideal choice for Nifty50

Nifty Today: An overall improvement in market breadth over the last week suggests limited downside capped within 22900

Nifty Strategy: Short Strangle (13FEB2025 series)

 

Strategy Details:

  Expiry: 13FEB2025

  Strikes: Sell 22800PE and Sell 24000CE

  Net Inflow: 18

  Stop Loss: 36

  Target: Entire Premium Inflow

  Rationale:

  >> There is an improvement in the overall market breadth over the last week, suggesting a limited downside capped within 22900. On the higher side, 23800 remains crucial and might take some time before it is breached.

  >> Given this setup, the market is likely to consolidate within this range, making a Short Strangle strategy an ideal choice to capitalize on time decay (Theta decay).

  >> This strategy offers the potential for profits if the market remains range-bound along with a contraction in Volatility and Theta decay.

 

Disclaimer: Sahaj Agrawal is Senior Vice President, Head of Derivatives Research at Kotak Securities. Views expressed are his own.