Sahaj Agrawal of Kotak Securities suggests 'Short Strangle' on Nifty50

Recommended Strategy:

Strategy: Nifty Short Strangle

Expiry: 27MAR 2025

Strike Prices: Sell 23,200 Put and Sell 24,100 Call

Net Premium Inflow: 40 points

Stop Loss: 78

Target: Entire Premium Inflow

Rationale:

• Given the sharp rally in the last few days, Nifty is likely to take a breather and undergo a consolidative phase.
• The resistance on the upper side is expected near the key 50 per cent retracement level of the entire fall from 26,277 up to 21,965, which comes at around 24,100 levels.
• The support on the downside could be expected to come in near 23,300-23,200 levels.
• Under 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: This article is by Sahaj Agrawal, senior vice president, head of derivatives research of Kotak Securities. Views expressed are his own.)