Nifty signals consolidation: Today's top trading strategy explained

Recommended strategy:

• Nifty Short Strangle
• Expiry: 24APR 2025
• Strike Prices: Sell 23500 Put @19 and Sell 24600 Call @17
• Net Premium Inflow: 36 points
• Stop Loss: 70
• Target: Entire Premium Received

Rationale :

• Nifty extended its positive momentum on Monday, closing above the 24,100 mark with a strong gain of 1.15 per cent; however, short-term technical indicators have entered overbought territory, suggesting markets may consolidate.
• Significant open interest build up is seen at the 24,500 Call and 23,500/24,000 Put strikes, indicating a likely trading range between these levels.
• The current setup favours a range-bound outlook, with no immediate trigger for heightened volatility.
• A Short Strangle strategy is well-suited to capitalise on time decay and performs best in low-volatility, sideways markets.

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