Recommended Strategy:
Strategy: Nifty Short Strangle
Expiry: 20FEB 2025
Strike Prices: Sell 22,300 Put and Sell 23,500 Call
Net Premium Inflow: 26.5
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Stop Loss: 50 Target: Entire Premium Inflow
Rationale
Nifty50 is trading near the 22,800 support level, with the broader monthly range observed at 22,500 - 23,500. The index has been consolidating within this range, indicating lack of strong directional momentum.
A Short Strangle is an effective strategy to capitalize on time decay (Theta), as long as Nifty remains within the expected range without sharp breakouts.
The chosen strike prices provide a comfortable buffer, allowing the position to remain profitable as long as Nifty stays within the defined range. (Disclaimer: Sahaj Agrawal is a senior vice president and head of derivatives research at Kotak Securities. Views expressed are his own.)