I have received requests from many traders to teach them a strategy to trade the expiry day. I will discuss a very simple expiry day nifty option strategy that can safely fetch you 20 times to 50 times even 100 times returns. This strategy can be implemented on Nifty OR Bank Nifty options.
Some Common FAQ on Expiry Day Trading
In the Indian stock market, monthly futures and options for stocks and indices expire every last Thursday of the month. So traders need to settle their positions before the expiry of the contracts. Nowadays, the Nifty and Bank Nifty index has a weekly expiry. So the weekly contracts of the indices expiry every Thursday. This provides a trading opportunity for active traders every week. In case Thursday remains a holiday the expiry takes place on the previous trading day.
Yes, you can safely trade options on the expiration day. The only things you need to know is how to execute options trades correctly and the correct range in between which the market will expire.
When the calls expire they are no longer in the system. If they expire above the strike price that you purchased, it will be sold and you will get the last premium multiplied by lot size minus any brokerage and taxes paid. On the other hand, if the call option expires below the strike price that you have purchased you will lose the entire premium multiplied by the lot size and any brokerage and taxes paid.
In case you hold the options and they expire worthlessly you just lose the entire premium multiplied by the lot size plus any brokerage and taxes paid. But in case these options expire in the money you need to pay more taxes and STT and that will hamper your profits. Hence, it is advisable to always square off any in the money options before expiry.
Points to Remember on Expiry Day
Remember expiry day is a critical day to trade where actually the market remains very noisy. If you trade with a chart, you can face many whipsaw on an expiry day. You can often see that trend-following indicators are generating a buy signal and the market is falling down on the next bar. The same can be true for a sell signal also.
Many traders lose money on expiry day. But there can be an immense profit if you can trade expiry effectively. In fact, the stock market is like a sword. You need to know how to handle it properly.
Yes, this strategy can make your 1 rupee to grow to 20-50 OR even 100 rupee in no time. This is the power of the expiry day nifty option strategy. You need not be a big technical analyst to trade Nifty on the expiry. The only knowledge you know is where actually Nifty is expiring.
Collect Correct Options Data For Expiry Day Nifty Option Strategy
You first need to collect options data to understand exactly where Nifty is going to expire. You may not get the exact level, but you will get a band within which the Nifty is going to expire. For that login to the Open Interest page for the Nifty index on our website.
Just open this page on expiry day morning. Concentrate on the first image. Locate the point when the last time the red bar is longer than the blue bar and the first time the blue bar is longer than the red bar. The red bars are put open interest and blue bars are call open interest. See the image below:
Here 9400 is last when put open interest is greater than call open interest. So the expiry will be above 9400. And 9500 is first when to call open interest is greater than put open interest. So the expiry will be below 9500.
The Expiry Day Trading Game
Now, keep 9400CE and 9500PE of same month expiry in your terminal. The real game starts after 1:30 PM. If you get Nifty below 9400 simply buy a 9400CE. You will get it at 1-5 rupees. Nifty will 100% rise above 9400 and you can get 10/20/50 even 100 rupees of your call option.
Similarly in the expiry day nifty option strategy if you get Nifty above 9500, you know Nifty will not expire above 9500. So simply buy a 9500PE. You will again get it within 1-5 rupees. Nifty will 100% fall below 9500 and you will get big gains.
Money Management for Expiry Day Nifty Option Strategy
Do not trade more than 2% of your capital in this strategy. Because there will be no stop loss. Your maximum loss in this expiry day nifty option strategy will be limited to the premium you are paying for the option. You can also refine Nifty expiry levels using the 50 point open interest values like 9450. In that case, you need to trade 9450 calls OR put.
Expiry Day Trading in Bank Nifty
If you want to trade Bank Nifty in this strategy please visit the Bank Nifty Open Interest page. The same kind of expiry play is possible in the Bank Nifty index as well. Moreover, due to a higher volatility Bank Nifty offers a better trading opportunity to active traders. We recommend you to bookmark our Nifty and Bank Nifty open interest pages. We are now offering full interactive charts on these pages.
Using Options Max Pain in Expiry Day Trading
We can also use Options Max Pain in predicting the expiry value. There is a Max Pain calculator on our website. This page will update the Nifty and Bank Nifty options Max Pain in real-time.
Now, what this Max Pain indicates. This indicates the level where if the market expires, the options buyers will have maximum pain. In other words, this indicates the expiration levels. Suppose on 28th November 2019 expiry morning we have seen that the May Pain is around 12100 level. So we understood that the expiry will happen near 12100. So in the early trades when the market was trading at higher levels we could enter short sell for a target of 12100.
Suggested Reading
I suggest reading the following book: Trading Options at Expiration: Strategies and Models for Winning the Endgame (paperback). This is a complete guide on how to trade options on the expiry day.
Conclusion
Trading in the expiry can be a really profitable business if you can predict the expiry level correctly. Many traders lose money on the expiry day. But this day is a money-making opportunity for the options traders. Money can be made both by buying and selling options on this day.
What is the accuracy of this strategy?
What if the option is ITM at 1.30 pm? Then we wont get it at a cheaper rate
Satish, Nifty Open Interest is the number 1 tool to analyze Nifty. It helps you see what others can’t see with naked eye. In case you do not get a good entry price avoid trading as you will not trade just because the market is open, rather you will trade for profit. Our of 12 expiries if you get a great entry in 6 times that’s also more than enough.
Thanks for the reply. Wanted to test the strategy today. BN the range is changing from the morning i.e before it was 200-300, 300-400, 400-500 and now again 300-400. So which range to trade for at 1.30 pm?
If there is a clear trend try to use a trend following strategy. From your comment, it seems that Bank Nifty trend is up as it is going up gradually. So try to buy close to a Bank Nifty open interest support. Dont try to short sell.
sir what about STT trap??? how
to escape from it
Yasir, to avoid paying excessive STT please square off all your in the money options before expiry.
Thank you sir with your quick reply,just one more question that if i bought 20 lots of nifty option on an expiry date AT THE MONEY and somehow they are expiring in IN THE MONEY options so is it hard to sell before closing of market.because lots is 20 and in the money
I don’t think there is STT anymore.
seriously??
Hi Indrajit,
Many thanks for your openness in sharing this strategy. Just a doubt since this is a buying the option strategy how to overcome the STT disadvantage since for the Nifty 7 – 8 Rs would be going towards STT on expiry if the option is exercised.
Thanks.
Sajeev
Always sell in the money (ITM) options before the expiry. You can leave out of the money (OTM) options.
Totally misleading article. Dont even try it if you value your money
Kensington can you elaborate what is so misleading in it?? We are playing with the odds, low risk, and high return. Will wait for your feedback.
Great!!! Dada, You have done “Big”Research and sharing for benefit of others…….one shouldn’t mind loss/profit as that support/resistance comes from Nature
Hi indarjit sir,
Please explain ITM and OTM option by example in respect of nifty.
Suppose the spot price is 10500, then 10550 / 10600 all upside calls are out of the money (OTM) but 10450 / 10400 all downside calls are in the money (ITM). Similarly, 10450 / 10400 all downside puts are out of the money (OTM) but 10550 / 10600 all upside puts are in the money (ITM). Hope this helps 🙂
As u written actual game start after 1:30 pm.
But opent interest chart change since morning every time. Which time we have to consider red and blue bar.
Ashok, as this is expiry day’s play, we will start just before 2 hours of expiry so that the open interest cant be changed once again.
Mr. Indrajit…same question here…
please explain what time we consider red and bule bar…..
at monring or after 1.30 pm
Pradip, for expiry play check after 1:30 PM. Bcoz morning setups may change by that time. Also, you can check the Options Max Pain for exact expiry level.
Hi,
can i get Historical “Nifty Open Interest Charts….” for study purpose..
….as per your advice 25 jan expiry
i take 11050 ce & 11100 pe
bank nifty
27300 ce & 27400 pe
……………….its worked………..great
Pradip, good to know that it worked.
Is this strategy applicable for bank nifty?
Ashok, yes it works for Bank Nifty too even in weekly expiries. You can check this post on Bank Nifty Open Interest.
Dear Sir, can you tell me where can i find the weekly expiry OI charts?
You can find it here for weekly Bank Nifty options.
Thank you for the reply
I Checked yesterday for bank nifty exp since 2 har up to market closing. Red bar was at 25500 and blue bar at 25700. But bank nifty never came below and above this level. It was moving in between at 25560, 70, 80 like this. Then what is the strategy for trading at exp day.
Mr. Ashok check exp. of the 25-01-2018….its happen
Please tell me bank nifty option selling strategies at the time of expiry.
Praveen you can consult Options Max Pain chart for selling options.
Sir how to read option chain and what is OI
Praveen, you can check this post on Bank Nifty open interest.
From Oct 2018 expiry is going to be at 11:55pm, then what’s the time frame u are going to check OI ? Thanks
Tej, first let it start happening, then watching the market for few days we will decide the strategy.
This didn’t work in the last two week BNF expiry i.e. 24th and 31st May. The OI level kept on changing till the end. Was this due to the HDFC news?
Zafar, market is always changing. However, this strategy works 70% to 80% of times. Hence stick to it and trade with a proper stop loss, so that you don’t lose much when this strategy fails.
Yes, it did work twice/thrice. The only problem is that it is difficult to restrict loss during the last 30 minutes due to wild movement. Trying to figure out how to place correct stop loss and not lose out on gains as well.
Use some trailing stop loss to protect your profit. Don’t keep the SL in mind. Can use a bracket order and use the TSL option in it.
Should we trade using this strategy tomorrow as there was a RBI decision today. Or during swings, we should be away?
Sahil, any expiry you can try this.
Please write strategy for call/put writers on expiry day
Sonu, we have already had some articles on that. Please read the following post for weekly Bank Nifty options writing strategy.
Hello sir !!
Thanks for the strategy . I am excited to try this .
The open interest data that we will be looking at is showing oi on the day of expiry at every hour ?
or it is overall open interest of call and put of overall month ?
Nikhil, the first chart is overall open interest chart and the second chart is open interest change for the day.
What if there are no buyers for ITM call options after 2 pm. Dont you think there is risk of buying ITM options on expiry day?
Shyam, there is always risk associated in trading. We are trading as per this strategy where the risk is very less and the return is huge.
Sir,
What i wanted to say was ITM options are quite expensive. Say if we are selling expensive ITM options are there ppl who will really buy this? Its just a query as i started traing in oprions recently. I am no questioning you strategy.
Which post are you talking about?? Expiry day strategy?? This has nothing to do with options selling.
indrajit this strategy really amazing. How I can contact you for more such strategy
Sandeep, our contact page is here. Also, you can WhatsApp at +91-9674321856.
sir i need expiry day statergy please provide ….
Have you not read the post above?
today your streategy did not work . also i saw open interest keeps live chart keeps changing so it is hard to select right strike price . i will follow up coming expiry also .
Pankaj, today it saved veteran traders a lot. Check, highest open interest for BN was at 27300 and 27500. 27400 level was indecisive. Hence the strategy was to buy put above 27500 and to buy call below 27300. Anyways, either way, there was no trade today. I feel you have not yet got the strategy right.
BN open interest was live.BN was never below 27300 after 1.30 pm .anyway there was no big move after 1.30 either way
Pankaj, as BN never moved below 27300, as per strategy no trade triggered. I just told you that.
sorry i could not understand that i have to check open interest after 1.30 and ope interest data is live . i will check next week . this week no trade triggered .
HI SIR, WHERE FIND OPTION OI CHART WITH CANDLE PATTERN
Heard that RMoney has a terminal with the same.
Dear Sir, this strategy is very interesting thanks for this, but one thing i am not understand pl explain how to identify- first time blue bar is longer than red bar
Anil, you can find that in the chart. Find the first strike price with the blue bar bigger than the red bar. That is the first resistance.
you said buy at 1.30.
what if we buy and then we do not get seller at when we want to sell?
What is the reason that you will not get a seller in index?
Great information , you opend for every one.
Umapathi, it’s my pleasure…..
Can we use this strategy in the morning everyday to trade Nifty? If not, how do we decide whether to buy Nifty PE or CE and at which strike price?
No, this is expiry special
Thank you Indrajit for the discussion of strategy.It will help a lot.
Could you please elaborate last and first bar…what does it mean? Meand the first and last bar from spot price where we have more OI? Please help to understand.
Bar means the bar in the open interest bar graph.
Mr. Inderjit, I tried your strategy on 30/05/2019 on Nifty.
Max Pain was showing at 11650 from 1.30 to 3.30 pm.
But Nifty closed at 11900.
How does your strategy work in such a situation?
Hi, max pain can also change with change in open interest. Anyway if you have taken a short in Nifty seeing the max pain, your decision was right. But there will be some days when your stop loss will hit. Yesterday was such a day. Go ahead and use the same strategy in the days to come. This will give you around 75% accuracy.
I was Trading at 11900 while your MaxPain showed 11650.
This is the very point that the Max Pain has no reliability.
The FII Don not trade on the standard Max Pain calculation. Their strategy is confidential.
Therefore, the strategy can not be used since the Max Pain strike is not the expiry strike price.
This strategy is misleading, and should be removed.
Where can we find this nifty open index charts or bars
Hi Atul, you can find them here.
i cannot understood your straitgey is it available in hindi
Nitesh, wait till we make a video in Hindi.
IN OPEN INTEREST OF NIFTY AND BANK NIFTY, WE SHOULD SEE TOTAL OPEN INTEREST OR CHANGE IN OPEN INTEREST ON THE EXPIRY DAY?
Janardan, you need to see both. First, see where are the highest open interests close to the closing price. They are supports or resistances. Now, check the change in open interest charts to see whether those supports or resistances will be maintained or taken off.
Dear Sir, This is about supertrend. when 30 minutes trend is in BUY mode, you recommended to Buy in 5 minutes chart whenever it signals. Pl clarify, can i sell in 5 minutes trend till a buy signal comes in 5 minutes chart.
If 30 minutes chart is having a sell you can take sell on all 5 minute sell signals.
Sir
Really your option expiry strategy is a magic.
Thanks
Thanks a lot 🙂
Hi sir thanks a lot for the option expiry strategy
Welcome 🙂
Sir
For expiry day.
Which strike should be selected? Should the selected strike be near the spot? Also should one be safe if he invest same amount in buying both ,Suppose Nifty 11000PE and nifty 11000CE ,When nifty spot is very near to 11000 . Can you guide us sir.
Regards
Shubhanika
If you find a spike above 11000 and saw calls still sold there in the OI graph buy a 11000 put. And you get a spike below 11000 with puts remain sold buy a 11000 call there.
Hi, last September expiry 10850 PE moves from 2.0 above 40 and close at 44. I was sitting on terminal and 3-4 times 10850 PE comes to 2 and move to 20…
I just want to know if I bought it at 2 and not sell it myself, what happens? Is it closed at 44 with huge profit or close at 0.05 with loss of premium.
Pls revert with your we whatsapp number.
You will need to pay excess STT for not selling in the money options. So square it off.
Hi Sir, last 2 weeks these strategy is not working. Please explain
Can you tell me how to use and trade this tool
Hi the post is quite elaborative. You can also watch this video.
Thank you very for sharing such wonderful techniques. But when I downloaded the excel sheet through the given link I got the very old sheet. Please suggest how can I download the latest data? thanks in avdvance.
We have a live update of these OI charts on our website. Check for Nifty Open Interest and Bank Nifty Open Interest page.
hello, i applied this stratergy last thursday and earned about 1500 on bank nifty on capital of 2500, u said trade this after 1.30, and when at proper levels, when should i exit?
and any other tips regarding this stratergy?
Great to know that you earned money. Search in my youtube channel for more tips on this.
Hello Indrajit, had a query if BankNifty Max pain on weekly expiry is at 35120 in the morning and Max pain is at 35400 shown so will the Call prices become bullish and after 1:30 PM when there is no time value the premiums of 35100 for example bought at say Rs14/ will suddenly go up .
If Max Pain is on the high side either the price of Bank Nifty will go up or the Max Pain will come down.
Alsso adding to the previous question if Max Pain for Nifty is at 16650 CE,OI change addition is highest at 16800 CE at 101,000 and Nifty is trading at 16620,with OI increasing to 17000 then tapering to negative so can we say that traders are adding position for the day and may see markets going up,all this is for date 3 March 2022 at 10:45 am
Also adding to the previous question if Max Pain for Nifty is at 16650 CE,OI change addition is highest at 16800 CE at 101,000 and Nifty is trading at 16620,with OI increasing to 17000 then tapering to negative so can we say that traders are adding position for the day and may see markets going up,all this is for date 3 March 2022 at 10:45
Hello Indrajit,
Is there any web recordings where I can understand the expiry strategy better.Would really appreciate the same
You can watch this video here.