Nifty Options Trading Strategy September 7, 2014 | Momentum Intact
In our previous analysis http://snip.ly/TlY7 we had stated that Nifty was good a momentum move. This momentum move did unfold today. In today's write up we will look at the technical outlook to study momentum build up. A lot of traders in the market are fearing a fall, given the sharp move in the market. The swing indicator and the contrarian indicator also seem to suggest that we are near a short term pull back. However the short term oscillator has given a fresh buy and the bias indicator is showing clear trend patterns which are supportive of the price chart which has given a breakout on the upside. Our job as traders is to minimize risk first and then continue to "friend the trend". So to protect ourselves, if you are long options convert the existing position into a covered call on weakness intraday in the market. This means tomorrow is a day of watching the market closely. Our view view of a bull run remains intact and we would be looking to buy the dips based on the directional cues of the momentum indicator. As a protection to the overall portfolio 7700 October puts can be purchased through entry stop positions.
