NIFTY vs BANKNIFTY

F&O
1

Hello F&O traders,

I have noticed a lot of F&O traders mostly trade NIFTY or BANKNIFTY for the liquidity, lower margin and predictability advantages (correct me if I am wrong)

I have been wondering if there are any relative pros and cons for trading NIFTY over BANKNIFTY (or vice versa)?

I understand that liquidity and margins is more advantageous in BANKNIFTY but NIFTY seems to be less volatile.

Would love to know what are the parameters or circumstances under which you would prefer trading NIFTY vis-a-vis BANKNIFTY for a fixed capital.

2

I personally like Bank nifty because of its volatility. I only sell options. Higher the volatility higher is the premium.

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3

That’s a good point. How do you manage risk with the higher volatility as an option sellers?

4

I simply take delivery if it comes ITM. Mine is all cash covered option selling.
My required return is on a much lower level than anyone trading in options. I target just 30 points per week on sale of both put and call taken together. So unless bank nifty moves more than 10 percent per week in one direction I am not at risk.
Worked so far for 18 months. Not sure if it will work in future too.

3 Likes
5

Thanks Jason :slight_smile:

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6

How can you take delivery of banknifty?

7

I buy bankbees when it comes ITM

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