Bank Nifty Trading Strategy Today: The Indian stock market indices, Sensex and Nifty 50, recorded a stellar rally in the month of September with both the benchmarks scaling new highs. The Bank Nifty index also jumped nearly 5% in the past one month.

However, on Friday, the frontline indices ended lower on profit booking at record levels. The Sensex fell 264.27 points, or 0.31%, to close at 85,571.85, while the Nifty 50 ended 37.10 points, or 0.14%, lower at 26,178.95.

Bank Nifty index underperformed the benchmark indices and closed the session 541.05 points, or 1.00%, lower at 53,834.30, forming a Bearish Belt Hold pattern on the daily charts. On a weekly time frame, Bank Nifty shows signs of negative divergence, a strong sign of a reversal.

“Bank Nifty on a daily time-frame is walking on the band, showing signs of a rally, however it is not able to break the resistance at 54,100 levels,” said Rahul Ghose, CEO of Hedged.in.

With the view of sideways to the downside, Ghose suggests a low-risk Bank Nifty Options strategy from hedged.in which makes money if the Bank Nifty falls below 53,000 by the end of October expiry.

“Even if the Bank Nifty does move up or sideways, the max risk in the trade is ₹750 only,” Ghose said.

Here’s Bank Nifty options trading strategy for today from Rahul Ghose:

Calendar Bearish Ratio Spread

Trade Structure:

> Buy 1 lot of the 30th Oct expiry 53000 PE at CMP 373

> Sell 1 lot of the 30th Oct expiry 52000 PE at CMP 194

> Sell 1 lot of the 30th Oct expiry 51000 PE at CMP 103

> Buy 1 lot of the 09th Oct expiry 51200 PE at CMP 30

Trade Rules:

The capital required in the trade is ₹42,800. This trade can be entered today if Bank Nifty is trading between the levels of 53,600 and 54,000. The maximum loss in the trade is ₹750 and one can look to exit with a profit of above ₹1,500 per set, Ghose said.

Trade Modifications:

The trade is protected with a limited risk of ₹750 per set. However, if Bank Nifty goes above 54,600 levels, the sold Put (51000 PE) along with the offset leg can be brought higher by 500 points, to get more credit, making the trade safe, Ghose added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.