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Adopt 'Short Strangle' on Nifty ahead of Budget: Sahaj Agrawal, Kotak Sec

Nifty strategy for Budget 2025: The immediate Support & Resistance levels for Nifty50 index are: 22,700 & 23,400

The National Stock Exchange (NSE) Nifty 50 Index ended below the 200-daily moving average (DMA) after a month, with the index now down 5.3 per cent, or 1,254 points, from a high of 24,792 in just five trading sessions. It closed at 23,587.50 on Frida

Sahaj Agrawal Mumbai

1 min read Last Updated : Jan 31 2025 | 7:22 AM IST

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Nifty Strategy: Short Strangle (6FEB2025 Series)

Strategy Details:

Sell 24500 CE & Sell 21900 PE

Inflow: Rs 40

Stop Loss: Rs 74

TGT: Entire Premium Inflow

Rationale:

> Union Budget 2025 scheduled for tomorrow, led to elevated volatility.

> Implied Volatility (IV) has spiked due to uncertainty surrounding the Budget announcement.

> The immediate Support & Resistance levels are: 22,700 & 23,400.

> In this environment, a Short Strangle strategy is attractive to capitalise on: Elevated IV and Time decay (Theta). This strategy offers the potential for profits if the market remains range-bound along with a contraction in Volatility post event and Theta decay.

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