Trade setup for Budget 2025: How to trade Nifty 50 options? Rahul Ghose suggests this trading strategy for 1 February | Stock Market News
Finance Minister Nirmala Sitharaman will present the Union Budget 2025-2026 on 1 February 2025 in the Parliament. Ahead of the Budget, the Economic Survey 2025 is set to be tabled today.
With the Budget 2025 triggering heightened market volatility, stock market traders are presented with a unique opportunity to capitalize on inflated option premiums. By strategically selling these high premiums while hedging against extreme market swings, traders can navigate the uncertainty effectively.
According to Rahul Ghose, CEO of Hedged.in, a well-structured Nifty options trading strategy can help traders manage risks and maximize profits during the budget session. He recommends a carefully curated budget strategy that balances premium collection with capital protection.
“It is crucial to select strike prices carefully to ensure capital protection amid sharp movements. However, holding the trade through the budget event can be profitable, as volatility typically declines afterward, leading to premium contraction,” Ghose said.
Budget Trading Strategy By Rahul Ghose
Ghose’s recommended strategy involves a combination of buying and selling Nifty put options across multiple expiry dates to hedge against sharp market movements:
Trade Rules
The capital required in the trade is ₹1,65,000. This trade can be entered if Nifty 50 is trading between the levels of 23,150 and 23,300. The maximum loss in the trade is ₹3,000 and one can look for a profit of double the risk in the trade, Ghose said.
Trade Modifications
The trade is protected with a limited risk of ₹4,000 per set. If Nifty 50 starts going above the 23,800 level, the sold put has to be rolled upside in the trade making the bought put safe, he added.
Ghose emphasizes that holding the trade through the budget event can be beneficial, as volatility generally declines post-budget, leading to a contraction in premiums. This makes the strategy lucrative for traders aiming to take advantage of short-term market fluctuations.
With careful execution and risk management, this budget trading strategy can help traders optimize returns while minimizing exposure to extreme price swings in the market.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
