On Thursday, the index touched highs near 24,980 before experiencing some profit-taking, reflecting investor caution. Technically, the index is showing signs of consolidation with sideways tendencies.
“Immediate support is seen in the 24,600–24,650 range, while a more critical support lies near 24,330—breaching which could trigger bearish momentum,” said Sahaj Agrawal, Senior Vice President and Head of Derivatives Research, Kotak Securities.
He noted that on the upside, the key resistance is around 25,150, acting as a threshold below which mean reversion is likely to remain in play.
“The derivatives market has presented mixed signals, with fluctuating positions in futures and options. Notably, the recent shift of NSE’s expiry day to Tuesday is poised to affect volatility patterns in the near term,” Agrawal added.
Overall, Sahaj Agrawal stated that the market environment is characterized by cautious and balanced range-bound trading between support near 24,300 and resistance near 25,150.The technical outlook suggests that the Nifty is likely to remain within this range for a few more days.Given this backdrop, a Short Strangle options strategy appears well-suited. This approach can effectively capitalize on time decay (Theta) while benefiting from the expected consolidation phase.
The strategy remains profitable as long as the Nifty trades within this predefined strike price range, aligning well with the current equilibrium of bullish and bearish forces.
Short Strangle
The short strangle strategy is an options trading approach where an investor sells both an out-of-the-money (OTM) call option and an OTM put option on the same asset, with the same expiration date. This strategy is designed to profit from time decay while benefiting if the price remains within a range.
(Based on prices as of September 4)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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