Monthly Vertical Calendar

Option Strategy
This strategy involves selling Bank Nifty at-the-money (ATM) call and put
options in the current month and buying ATM call and put options in the next
month. The trades are executed on Fridays with 40 days to expiry and closed out
on Wednesdays on the monthly expiration.

by Amit Bukharia
Rules of the Strategy
1 Sell Bank Nifty ATM Call &
Put (Current Month)
Sell the at-the-money call and put
options on the Bank Nifty index for the
current month's expiry.
3 Trade Entry
Enter the trades on Fridays with 40 days
to expiry, at 3:15 PM.
2 Buy Bank Nifty ATM Call &
Put (Next Month)
Buy the at-the-money call and put
options on the Bank Nifty index for the
next month's expiry.
4 Trade Exit
Exit the trades on Wednesdays on the
monthly expiration, at 3:15 PM.
Risk Management
Margin Required Profit Target Stop Loss

The margin requirement for The target profit for this The stop loss is triggered as
this strategy is Rs 50,000 strategy is Rs 2,000 per lot. soon as the market breaks
per lot. the green trend line.
Trade Adjustment
No Adjustments
The strategy does not allow for any adjustments. Trades are either booked at profit or loss.
Entry and Exit Timing
Entry
Friday, 40 DTE, 3:15 PM

Exit
Wednesday, Expiration, 3:15 PM
Benefits of the Strategy

Time Efficient Consistent Income Diversification

Trades are held for a short The strategy aims to generate The strategy can be part of a
duration, minimizing consistent profits with well- diversified options trading
exposure. defined risk. portfolio.
Potential Risks
1 Market Volatility 2 Liquidity 3 Regulatory
Concerns Changes
Rapid market
movements can lead to Difficulty in executing Regulatory changes
unexpected losses. trades during times of can impact the
low liquidity. viability of the
strategy.
Conclusion
Disciplined Approach
The monthly vertical calendar option strategy requires a disciplined approach to risk
management and execution.