Weekly Expiry Learning

Nifty weekly option expiry has turned the Thursdays into casino. Markets are clearly manipulated and held rangebound in the day for pocketing up the options premium. Nifty started the day on a negative mode from short positions carried by most of the option buyers from previous day. Most of the people were short on Nifty probably because Nifty had pierced the gap created between 12150 to 12021 and was in the process of filling the gap. Everyone was expecting the markets to go down and touch the levels of 12021 where it could find some support. Markets did the unexpected. Took a sudden turn and went up 70 points into the unexpected range of 1250 to 12,200. Clearly trapping both the longs and the shorts (Calls and the Puts) in the market. The markets made virtually no movements in between 1:00 PM to 3:30 PM and was clearly held in a range strongly and thereby ending the day with eating up the entire premium. There were few learnings throughout the day. If you are an intraday trader and have to trade through the day, or if you love to trade on expiry days then you can follow a simple strategy.

• After the market has stabilized during the day around 12:00 Noon, identify which of the of the CE and PE has seen the maximum OI build up. This can be found in the NSE Website. Note the ranges which has an unusual buildup ( anything in between 2 million to 5 million OI build up ).

• This will establish a probable range for the day and a safe boundary for trading.

• You can then Write CE and PE on both the boundaries and wait for the day to end and pocket the premium.

• Do not forget to adhere to proper stop loss in your strategy.

• The above strategy works only when you see an unusual CE and PE both being built up.

Other than this Option buyers should avoid trading on an expiry day. You will only end up losing money on such days.