Look beyond Nifty Index into Nifty 50 companies list

How to Ace Nifty 50 Option Trading?

Are you an option trader in Nifty 50 Index? If yes, then next 2 – 3 minutes of reading is worth your time. It will boost your overall option trading journey, by giving you an insightful perspective of evaluating Nifty 50 Index. In order to trade confidently and independently in Nifty 50 options, we need to understand the movement of Nifty 50. In technical terms, volatility in Nifty 50! Whether market moves up sharply, but the key question to address, is that move sustainable? Similarly on movement downwards, is it a sustainable down move? When an option trader should react immediately on sudden spikes, and when they should hold with confidence? If an option trader gains clarity on such questions, his style of option trading would improve significantly. Below we are attempting to answer these questions.

Nifty 50 Call Put Option

A million dollar question to answer! But let’s look into data to take our own decision accordingly. We have taken price change data from closing to closing of past few years to study volatility profile of Nifty 50. Historical volatility study suggests that 70% of the time, Nifty 50 has moved from one closing to another closing between +0.6% upside while -0.4% downside.

Within 1 STD2021202220232024 so far!
Upside+0.6%+0.6%+0.6%+0.5%
Downside-0.3%-0.4%-0.4%-0.2%
Nifty 50 Historical Closing to Closing Volatility Profile

This profile of Nifty 50 stays consistent for past 3 yrs, irrespective whether market have been bullish / bearish / sideways in entire year.

Considering this option traders can define their intraday or overnight strategy! However, let’s not discount rest 30% of the time. To manage that risk, we have Sentiments Decoder. This algorithmic tool performs price analysis on Nifty 50, as well as it’s top 10 high weightage stocks. If overall there is concurrence in the sentiment data then there is high probability for Nifty 50 to stay in the particular direction! With this insight and the sentiments decoder tool, option traders can ace their overall option trading in Nifty 50. They need to short or long Nifty 50 call put accordingly!

Nifty 50 stock list

Just to give the glimpse of the overall analysis that can help Nifty 50 option traders in holding their trades with confidence. Consider Weekly View on Sentiment Decoder as well as Intraday View. If both are in concurrence then there are possibilities for continuation. If not, then good possibility market may get rangebound or reverse! Accordingly option traders may choose to be cautious. If we break these sentiments data by Nifty 50 stock list, similar analysis holds for top 10 Nifty 50 stocks by weightage. Concurrence across stocks in sentiments data, then high possibility to stay in that direction. Otherwise not!

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