created : 6 days ago| | live deployment: 2

created : 6 days ago | live deployment: 2

Marktet User Bank Nifty Directional PS

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Strategy description

Description

This is a directional, positional options strategy on the Bank Nifty (BNF) index, designed to capture short-term directional momentum during the monthly expiry cycle. The strategy is deployed on any suitable trading day in the monthly series, except during the last four days before expiry, which are intentionally avoided to reduce volatility and unfavourable premium behaviour.

The system dynamically identifies and aligns with the prevailing market direction. It maintains option-writing positions with close hedges, creating controlled exposure while retaining flexibility to adjust as market conditions evolve. Positions are generally carried until monthly expiry, with no fixed stop loss or target. Risk and profit management are governed through adaptive hedging and systematic adjustment logic.

Key Highlights

Instrument: Bank Nifty Options (current monthly expiry)
Strategy Type: Directional / Positional
Entry Window: Any time in the monthly series, except the last 4 days before expiry
Exit: Monthly expiry day
Position Structure: Option writing with close hedging
Risk Management: Dynamic hedge and banking-based adjustments (no fixed SL / Target)
Objective: Capture monthly directional momentum through adaptive position management

Mechanism of Banking-Based Adjustments

When the market moves favorably, the strategy books partial profits from the profitable side. These banked gains are utilized to adjust, hedge, or defend the opposite side if it turns adverse. This method helps smoothen the equity curve, manage drawdowns, and maintain positions throughout the month without requiring additional capital.

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

Since the strategy does not employ a fixed stop loss, it remains exposed to overnight or opening gap movements against its directional stance. Such gaps can sharply increase premiums on the adverse side, resulting in temporary drawdowns.

Although the strategy can typically recover these losses through subsequent hedging and adjustments as the month progresses, large one-directional gaps can still cause significant interim drawdowns. Therefore, sufficient capital buffer and strong risk tolerance are essential.