Sahaj Agrawal of Kotak Securities suggests Short Strangle strategy on Nifty

Recommended Strategy:

 

Strategy: Nifty Short Strangle

  Expiry: 27FEB 2025

  Strike Prices: Sell 22,300 Put @ 16 and Sell 23,500 Call @ 14

  Net Premium Inflow: 30 points

  Stop Loss: 60 points

  Target: Entire Premium Inflow

  Rationale 

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

  Key reference points for Nifty are: Support at 22,750 and Resistance at 23,450.

  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 and head of derivatives research at Kotak Securities. Views expressed are his own.)