Profit from a Rangebound Nifty

Hello viewers. Welcome to the Fast Profits Daily video series. Myself Brijesh Bhatia.

Nifty, since the high of 15,431 in Feb, for the couple of months has been trading in a range. The upper band has been tight around 15,050-15,100. Lower band has been around 14,200-14,300 and the whipsaws continue.

Well for a full time trader, getting bread and butter at the end of the day for your family is very much important, and you might be looking for various opportunities. Where to trade in a range bound market?

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Well, if you look at the horizon over here, it's just Nifty trading in a range but for stock options or stock momentum or stock action, there is a lot of momentum happening in the stocks.

Well, if you are a Nifty trader and thinking, what should I do if I'm not trading stocks, for a Nifty trader, you have various options.

You look for short, quick moves of 80-100 points, which is very much momentum getting into the markets. Yes, the fear of gaps is always there.

Second option is do low risk wise taking call options for 20-30 points, you're exiting your positions but here, the position sizing matters a lot.

For momentum based trading, if you look at the call options, the Nifty has to move around. For trading at the money options, the Nifty has to move around 80 100 points. So that you gain around 30-35 points under the options.

Well, all trades here wouldn't be profitable but, yes, there are some days where you can make money out of that.

The third option is very slightly riskier, shorting the options where you need to look at the integrity. What are the requirements? Your margin is included.

If you're trading call options on the long side or put options on the long side you have to pay just the premium.

But when it comes to the options shorting you need the margins as well, mark to market as well. So keep a cheque on those as well, but yes, shorting the options, you can make strategies out of options.

Looking at the market, trading in a range for quite long, you can look for a shorting strangles shorting straddles where you think market is in range, 14,400-14,000, you can look at a strangle position over there and look for the shorting options.

If you think that markets might be a in a narrow range and hovering around 14,500, you can look for a straddle as well.

So, for a Nifty trader, yes, you have such options where you look for momentum based trades, short term trades, where you get in and out easily.

But yes, if your horizon is bigger, you definitely have to look at the stocks where the momentum is there.

If you look at recent scenarios where markets has been in a range for the last couple of months, even in the F&O, the stocks have seen a huge momentum. Easily 5% trades, 10% trades can be achievable.

So you can look for a such kind of momentum but yes, if you're a Nifty trader, at certain point, if you're not shorting options, then making the bread and butter and end of the day slightly difficult. So you need to keep a horizon.

For a system based trader, you should definitely for one or more systems where if in case of such a scenario, where you're looking only for index trades and market is not moving anywhere, there is a system which is making money for you.

So this is generally called diversifying your systems, which is very much helpful in the current market scenario. So I hope this video will slightly open your horizons for you on how to trade in range bound markets.

Signing off. Thank you.