Sahaj Agrawal of Kotak Securities suggests Short Strangle on Nifty

Recommended Strategy:

 

Strategy: Nifty Short Strangle

Expiry: 20FEB 2025

Strike Prices: Sell 22,500 Put and Sell 23,700 Call

Net Premium Inflow: 46

Stop Loss: 90

Target: Entire Premium Inflow

 

Rationale:

 

Market is likely to remain range-bound in the near term, adhering to the levels established over the past two weeks.

  The key reference points for Nifty are: Support at 22,750 and Resistance at 23,800.

  Given the current range-bound nature of the market, a Short Strangle strategy is an ideal choice to capitalize on time decay (Theta decay).

  This strategy is profitable if the market remains in a tight range, benefiting from both volatility contraction and Theta decay.

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