created : 2 weeks ago| | live deployment: 19

created : 2 weeks ago | live deployment: 19

Market User Nifty Directional PS

There are no tags defined for this strategy.

Strategy description

Description

This is a directional, positional options strategy on the Nifty 50 index, designed to capture short-term momentum during the weekly expiry cycle. The strategy can be deployed on the 1st, 2nd, or 3rd trading day of the expiry week, though 1st or 2nd day deployment is recommended. Early entry allows more time for recovery through banking-based adjustments if the position initially moves against the direction.

The system dynamically identifies and aligns with the prevailing market direction. It maintains option-writing positions with close hedges, providing controlled exposure while retaining flexibility to adjust as market sentiment evolves. Positions are typically held until expiry, with no predefined stop loss or target, as risk and profit management are handled through adaptive hedging and adjustment logic.

Key Highlights

Instrument: Nifty 50 Options (current weekly expiry)
Strategy Type: Directional / Positional
Entry: 1st, 2nd, or 3rd trading day (recommended: 1st or 2nd)
Exit: On expiry day
Position Structure: Option writing with close hedging
Risk Management: Dynamic hedge and banking-based adjustments (no fixed SL / Target)
Objective: Capture weekly directional momentum through adaptive position management

Mechanism of Banking-Based Adjustments

When the market moves favorably, the strategy banks partial profits from the profitable side and uses those gains to adjust or defend the opposite side if it turns adverse. This approach helps smoothen equity curves, manage drawdowns, and sustain positions without additional capital injection.

Risk in Case of Opposite Gap-Up or Gap-Down

Since the strategy operates without a fixed stop loss, it remains exposed to overnight or opening gap movements against its position. In such events, option premiums on the adverse side can expand sharply, resulting in temporary mark-to-market losses.

Although the system may gradually recover such losses through subsequent adjustments and hedging as the week progresses, large one-directional gap moves can still cause significant interim drawdowns. Therefore, an adequate capital buffer and sound risk tolerance are essential for smooth deployment.