Why trade Bank Nifty Options?
People love banks. Banks are the company or stocks most people have heard of. I know many friends you after creating demat account searched for State bank of India and invested.
The reason was simple State bank of India was a well know bank and they knew about it. Same goes for Options traders. Option traders love banks. They trade Individual banks and they also love bank nifty.
Due to this bank nifty have highest volume in all of traded Options Instruments. It attracts people. Nifty IT or any other Index does not have any participation as compared to bank nifty.
2. Weekly and Monthly Expiry
Many things we have discussed about Nifty is also applicable for bank nifty as well. Bank Nifty is the most traded Options Instrument in Indian markets. It is only Instrument which have weekly expiry as well along with Monthly expiry.
The Nifty and all other stocks have Monthly expiry. Due to weekly and monthly expiry the volume in bank nifty is more than that of Nifty and any other stock out there.
Note you should be extra careful while trading bank nifty. You should always check whether you are buying Options for weekly expiry or the monthly expiry. So you should check the dates before making a trade.
Some people prefer bank nifty due to predictability. Nifty is composed of stocks from different sector. Good news for a sector may be bad news for other sector. But this is not the thing with Bank nifty.
Bank Nifty is composed of Private sector banks like HDFC bank and ICICI bank etc and Public sector banks like SBI and PNB etc. So all the members of bank nifty are banks.
This similarity in nature is very useful in direction prediction. The only problem is correctly understanding the Government bank movement. By nature Private banks are bullish and Government banks are bearish.
The reversal in roles or both having same momentum sometimes creates problem for traders. This is the only issue you need to deal with while trading Bank Nifty.
Bank Nifty Important Points
Bank Nifty is second most traded Option Instrument after Nifty Options. It is combination of Top Public Sector banks and Top private sector banks. I would like to point out some important points regarding Bank Nifty which you should consider before trading in this instrument
- Bank Nifty is only instrument which has Monthly Expiry as well as Weekly Expiry.
- So you should be really careful while buying or selling the Options.
- Weekly Expiry is on Thursday or every week. If Thursday is holiday then it can expire on Wednesday
- News related to Financial Sector and Bank Sector impact it
- RBI Monetary policy impacts it as well
- If Government announces any relief for Public Sector banks then it will have positive boost.
- Loan Waiver and other similar announcements have negative impact on it
- The Lot size of Bank Nifty is 20 (Note earlier it was 40 but now it is 20)
- The volume is right behind Nifty only so liquidity is no concern
Bank Nifty Options OI sheet download
You can click on the Google Plus one button below to download the bank Nifty Options Open Interest Analysis excel sheet. If you are already logged into Gmail then download will become very easy.
The file will get downloaded automatically once you click on Google Plus one button.
Click on the Twitter button to download the fileFollow @moneypati
How to use Options OI Excel Sheet?
This sheet downloads and refreshes Bank Nifty Monthly Options data and provides useful insights based on that data. You can use Long and Short information to create your trade plan.
I have written one article on Long and Short information to help you get an idea about these terms and their importance or meaning in relation to trade.
In case you have not yet downloaded the Nifty excel sheet then you can also download the same for free. It is recommended to trade in Nifty and bank Nifty for beginners.
Advanced traders or who prefer to trade in a stock instead of Nifty or bank nifty can download the excel sheets for their stocks. Note I have created excel sheet for most of the popular stocks. You can download the same from below link.
For most traders Nifty and bank Nifty excel sheets fulfill the requirement. They mainly trade in these Instruments. But before trading in Options I would advice you to read the article I prescribed above.
It is better to enter the market with plan rather than plan after you have made a trade. You should be quick to react in market thus booking profit and loss as per your trade plan.