Suggest the best Intraday strategy for buying options in Nifty/ Bank Nifty?
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Patience plays a major role for option buyers rather than strategies. Simple Price action trading gives good results in option buying.
Follow the below steps to get succeed in option buying.
In a month there are around 3 to 4 trending days in Nifty and Bank Nifty. If you wait patiently and trade on trending days, you will get a very good returns. Most of the option sellers earn 10 to 15 percent a month.
Option buying on one trending day will gives you more than monthly returns of option sellers. So be patient before you take trade and square off the position after hitting your target.
Best Option Buying Strategies in India
Writing cash secured puts is the best strategy to purchase shares by executing it and when you read these short paragraphs you will understand the ease of making an option buying.
Buying a stock needs a lot of patience because you must execute a degree of tolerance and wait for a good reasonable buying price.
Imagine a situation wherein somebody shall offer cash and with which you can buy your preferred stock at a price lower than the same day trades. Yes, you can arrive at such a situation by writing cash secured puts.
Writing Cash Secured Puts:
Are you interested in generating income by writing cash secured puts? Then follow the below steps.
In this kind of strategy, when you move in to sell a put then you are at the same time providing rights to sell you about 100 shares of the stock at your decided strike price.
First Scenario:
Let me cite one example, say a stock is at INR 500/share and when it falls to INR 455/share, you should go for write a cash-secured put at that price INR 455 strike, by setting in an expiry in next two weeks and collect premium INR 543.
It means you are in agreement to buy 100 shares of the company stock @ INR 455 per share irrespective of a condition on or before the expiration date.
Note:
Make it sure that your trading account is with a cash of INR 45500 so that the moment the set strike price is reached, the money gets transferred and so does the 100 shares.
In any case, if the company stock closes below the strike price at the expiration, you will get to buy 100 shares for INR 455 per share and you can keep the INR 543 premium that was collected from you.
Second Scenario:
In another scenario, the stock may close above the strike price at the expiration, then you can keep the premium of INR 543 in this case and since the option buyer shall not be exercising the option you will not get to buy 100 shares.
You can at this stage continue to repeat the same process and obtain more premium.
You can end up in entering either of the three possible ways:
1. Out of the money: The contract expires and you can keep the premium and shall not buy the shares.
2. At the Money: The contract expires and you can keep the premium and shall not buy the shares.
3. In the Money: The contract expires yet it shall be exercised, you will keep the premium and buy the share at the chosen strike price.
Therefore, if you observe this strategy enables you to buy the stock below its current price, and even get the premium paid in all the three possible occasions.
Since, you are able to obtain shares for a lower price than buying them in a day trading, it is considered to be one of the safest option strategies.