Nifty Option Selling Strategy (For Consistent Income)

💼 Nifty Option Selling Strategy (For Consistent Income)

🔹 1. Concept Overview

Option selling (also called option writing) means selling call or put options to earn premium income. Since most options expire worthless, sellers have a statistical advantage — but managing risk is crucial.

🔹 2. Ideal Market Conditions

• Range-bound or sideways markets are best for option selling.

• Avoid days with major events (RBI policy, Budget, Fed meeting, elections).

• VIX (Volatility Index) between 12–16 is ideal — higher VIX = higher premiums but also higher risk.

🔹 3. Basic Strategies

✅ A. Short Strangle

• Sell one OTM Call and Sell one OTM Put.

• Example:

  • Nifty = 22,000

  • Sell 22,500 CE and 21,500 PE

• Profit if Nifty stays between 21,500–22,500 till expiry.

• Risk: Unlimited if market moves sharply beyond the range.

• Use stop loss and hedge with far OTM options.

✅ B. Iron Condor

• A safer version of Short Strangle (limited risk).

• Example:

  • Sell 22,400 CE, Buy 22,600 CE

  • Sell 21,600 PE, Buy 21,400 PE

• Profit: Nifty stays in between 21,600–22,400.

• Loss: Limited beyond hedge points.

• Risk-reward ratio ~1:1.5, ideal for weekly expiry.

✅ C. Credit Spread

• Sell an OTM option and buy another further OTM option on the same side.

• Example:

  • Bull Put Spread → Sell 21,800 PE, Buy 21,600 PE.

  • Bear Call Spread → Sell 22,200 CE, Buy 22,400 CE.

• Risk limited, ideal for beginners.

🔹 4. Risk Management

• Always keep hedges (buy far OTM options).

• Stop Loss: 25–30% of premium sold.

• Avoid holding overnight during high volatility.

• Use position sizing: Risk only 2–3% of total capital per trade.

🔹 5. Example

• Capital: ₹2,00,000

• Strategy: Iron Condor on Nifty (weekly expiry)

• Premium collected: ₹1,200 per lot

• If Nifty stays within range, profit = ₹1,200 × number of lots

• If breakout occurs, maximum loss = ₹800 per lot (controlled via hedge)

🔹 6. Tools You Can Use

• Sensibull / Opstra / Deltax / Quantsapp for option chain & payoff chart.

• TradingView for technical analysis of support/resistance zones.

🔹 7. Tips for Consistency

• Trade only one or two days a week (like Tuesday & Wednesday).

• Use technical + option data (OI, PCR, IV) before selling.

• Always keep stop loss orders in the system.

• Avoid overleveraging.

  💼 Weekly Nifty Option Selling Plan

  🔹 Objective

  To earn 1–2% per week (₹1,500–₹10,000) by selling options safely using hedged strategies.

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  📅 Day-by-Day Strategy Plan

  📘 Monday – Market Observation Day

  Goal: Identify trend and volatility.

  • Avoid trading in the first half.

  • Observe support/resistance levels on the daily and 1-hour chart.

  • Check India VIX, Open Interest (OI), and PCR (Put Call Ratio).

  • If market is stable (VIX < 15), plan a Short Strangle or Iron Condor for Wednesday entry.

  👉 No trading on Monday – just plan.

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  📗 Tuesday – Entry Day

  Goal: Enter with hedged positions.

  📈 Example Setup (Iron Condor)

  Nifty Spot = 22,000

  • Sell 22,300 CE

  • Buy 22,500 CE (hedge)

  • Sell 21,700 PE

  • Buy 21,500 PE (hedge)

  📊 Premium Collected: ₹35–40 per lot
  🧠 Max Risk: ₹60–70 per lot
  🎯 Target Profit: ₹20–25 per lot

  • Trade between 10:00 AM – 12:00 PM (after initial volatility).

  • Always set SL = 25% of total premium collected.

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  📘 Wednesday – Adjustment or Exit

  Goal: Book profit or adjust losing side.

  • If Nifty remains between range (21,700–22,300) → Book profit at 50–60% of premium.

  • If market moves sharply:

    • Shift losing leg closer (roll over).

    • Convert to Iron Fly if premium imbalance appears.

    • Or exit at small loss.

  📌 Example:
  If 22,300 CE premium doubles, buy it back and sell new CE 22,400.

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  📙 Thursday – Expiry Day (Optional Trade)

  Goal: Quick expiry scalps or avoid risk.

  • Experienced traders can sell 1-hour expiry short strangles between 12–2 PM with small SL.

  • Beginners should avoid expiry day volatility.

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  📗 Friday – Review Day

  Goal: Learn and plan next week.

  • Review trades: entry, exit, adjustments, SL hits.

  • Note:

    • What worked?

    • Which side was wrong?

    • How much was earned or lost?

  • Watch VIX and Nifty trend for next week.

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  🧮 Capital & Margin Requirement

  Strategy Type	Minimum Capital	Max Profit (per week)	Max Loss (controlled)
  Iron Condor	₹1.5 lakh	₹1,500–₹2,000	₹2,000
  Short Strangle (Hedged)	₹2.5 lakh	₹3,000–₹4,000	₹3,000
  Iron Fly	₹3 lakh	₹5,000–₹6,000	₹4,000–₹5,000

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  🧠 Risk Management Rules

  1. Always trade hedged positions.

  2. Keep max loss = 2% of total capital per trade.

  3. Avoid overnight trades during high event weeks (Budget, RBI, Elections).

  4. Book profit early — don’t wait till expiry.

  5. Never add to a losing position.

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  🔍 Best Tools

  • Opstra / Sensibull: for payoff charts & OI analysis.

  • TradingView: to mark resistance & support levels.

  • NSE Website: to check PCR & option chain.