Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

When to use Bearish Diagonal Call Spread in Nifty?

34 sec read

What is a Bearish Diagonal Call Spread?

Bearish Diagonal Call spread is neutral to bearish strategy which is executed by buying long-dated in the money call option and concurrently selling short-dated out of the money call option.

In Nifty futures on monday morning price opened with a big gap down and trading 500 points lower and also broken the recent trendline levels and the immediate trading sentiment turned negative.

The objective is to trade a short term setup for the expiry with a reasonable risk reward ratio especially in a fearful and rising volatile environment.

Bear Call diagonal spread creation

Short 1 lot of 9300CE – Current week expiry @ 188/lot
Long 1 lot of 9400CE – next week expiry @ 232/lot

Breakeven levels are at 8860 – 9578 levels and the strategy also has limited risk and limited reward style which suits execution especially after a big gap down day where you have to come up with controlled thinking.

What if Scenario on 7th May 2019 Expiry

UnderlyingExit DatePNLPNL Percentage
8,700.0007-May-20-1,813.94-16.84%
8,725.0007-May-20-1,640.50-15.23%
8,750.0007-May-20-1,450.65-13.46%
8,775.0007-May-20-1,243.34-11.54%
8,800.0007-May-20-1,017.50-9.44%
8,825.0007-May-20-772.06-7.17%
8,850.0007-May-20-505.92-4.70%
8,875.0007-May-20-218-2.02%
8,900.0007-May-2092.780.86%
8,925.0007-May-20427.493.97%
8,950.0007-May-20787.27.31%
8,975.0007-May-201,172.9410.89%
9,000.0007-May-201,585.7114.72%
9,025.0007-May-202,026.5018.81%
9,050.0007-May-202,496.2423.17%
9,075.0007-May-202,995.8327.81%
9,100.0007-May-203,526.1132.73%
9,125.0007-May-204,087.8637.94%
9,150.0007-May-204,681.8343.46%
9,175.0007-May-205,308.6849.27%
9,200.0007-May-205,969.0055.40%
9,225.0007-May-206,663.3361.85%
9,250.0007-May-207,392.1268.61%
9,275.0007-May-208,155.7675.70%
9,300.0007-May-208,954.5383.11%
9,325.0007-May-207,913.6773.45%
9,350.0007-May-206,908.3164.12%
9,375.0007-May-205,938.5155.12%
9,400.0007-May-205,004.2546.45%
9,425.0007-May-204,105.4238.11%
9,450.0007-May-203,241.8630.09%
9,475.0007-May-202,413.2922.40%
9,500.0007-May-201,619.3915.03%
9,525.0007-May-20859.767.98%
9,550.0007-May-20133.921.24%
9,575.0007-May-20-558.66-5.19%
9,600.0007-May-20-1,218.59-11.31%
Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Nifty Futures – Apr 2024 Future Contract – Positional…

Nifty Future Market Profile chart shows a sideways broader balancing structure in the last 5 trading session. However 4th Apr structure is indeed important...
Rajandran R
1 min read

Nifty Short-Term Trend Turning Negative – Market Profile Update

The short-term trend for Nifty appears to be shifting towards the negative, encountering intermediate resistance in the range of 21920-21950. Additionally, a top-down analysis...
Rajandran R
1 min read

Nifty Futures – Short-Term Overview – Feb 2024 Futures

Nifty Futures is a short term is likely to test the G2 High reference level around 22200. Short Term Supports are formed around the...
Rajandran R
46 sec read

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More