Bank Nifty hits record high; Use bidirectional strategy to navigate today’s expiry volatility

Bank Nifty has hit a new record high of 48,996 at 11:15 am on April 10. It is expected to remain range-bound with a bullish undertone in today’s weekly expiry.

As per Rahul Ghose, CEO of Hedged.in, “Bank Nifty will continue to maintain a sideways to bullish bias unless the key support area of 48,650 is breached intraday.”

He suggests using a bidirectional strategy to manage volatility in today’s expiry.

This strategy involves buying a put spread and a call spread on both sides, with a 200-point gap or a 50 percent offset premium from the two anchor strikes. ‘Bidirectional Hedges’ strategy aims to profit from movement in both the directions of the index.

The specific strategy is as follows:

(+) Buy Bank Nifty 48,700 PE
(-) Sell Bank Nifty 48,500 PE

(+) Buy Bank Nifty 48,900 CE
(-) Sell Bank Nifty 49,100 CE

Capital requirement

The capital required for this strategy is Rs 34,000, with an expected intraday reward of 1-3 percent and a risk of approximately Rs 1,000.

For optimal results, Bank Nifty index should move 0.5 percent or more in either direction after initiating the trade. If by 2:15 pm there is no significant movement, you can adjust the offset strikes by 100 points on the opposite side of Bank Nifty’s movement.

Also read: Option strategy of the day | Bull call spread after MCX ascending flag pattern breakout

For example, if the strategy is entered at 48,700 and Bank Nifty is moving upwards or remaining sideways, one can adjust by buying back the 48,500 PE and selling the 48,600 PE. This adjustment should only be made after Bank Nifty has crossed 48,900 on the upside, and vice versa.

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