F&O Radar | Arrange a short throat in the Nifty to benefit from Theta decay between the expected consolidation

This week, the Nifty 50A has shown mixed but generally positive market activity, supported by key technical levels. After the 29 August Gust was swinging at 24,405 at the Gust, the Nifty collapse reverted with the profitability and elasticity despite the small debris.

On Thursday, the sequence was touched near 24,980 in the index before taking some profit, reflecting the precaution of investors. Technically, the index is showing signs of consolidation with lateral tendencies.

Sahaj Agarwal, Senior Vice President of Kotak Securities and Head of Derivatives Research, said, “There is immediate support in the 24,600-24,650 range, while more crucial support is close to 24,330 -” said Kotak Securities Vice -Vice -Chancellor.

He noticed that on the sidewalk, the key resistance is around 25,150, which acts as a threshold, which means it is likely to remain in the game.

“The derivatives in the market have introduced mixed signals with fluctuations in futures and options. It is noteworthy that the latest shift of the NSE’s termination day is ready to affect instability patterns in the near term,” Agarwal added.

Overall, Sahaj Agarwal said that the market environment is characterized by cautious and balanced range-bound trading between support of 24,300 and resistance near 25,150.

The technical point of view indicates that the Nifty is likely to stay in this series for a few more days.

Given this background, the strategy of short -throat options looks good. This approach, which benefits from the expected phase of the expected consolidation, can effectively earn time on decay (Theta).

As long as the Nifty trades in this predefined strike price range, the strategy remains profitable, organizing well with the current balance of the boom and bearish forces.

Throat

Short throat strategy is an option trading approach where an investor sells both out-of-money (OTM) Call L option and the OTM put option on the same property, with the same expiration date. This strategy is designed to make a profit from time decay while the price is in the range.

(Based on prices up to September 4)

(Disclaimer: The recommendations, suggestions, opinions and views given by experts are their own. This does not represent the views of the economic time)