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How To Do Intraday Option Trading in Banknifty - Strategy, Systems & Backtested Results

Updated: Oct 22, 2022

Many traders make their living by trading nifty or bank nifty at the intraday level. A few traders directly trade in futures, whereas some deploy different option trading strategies to make profits.

There is a massive difference between ‘a successful trade’ and ‘successful trading.’ The latter demands the continuous execution of a trading strategy that has positive expectancy for a longer duration.

Nifty and Banknifty Intraday Options Trading Strategy Guide

Table of Content

What is Banknifty?

Banknifty Live Chart

Margin Details of Banknifty

Banknifty Historical Data

Nifty vs. Banknifty

Banknifty Support and Resistance

Banknifty Intraday Trading Strategy

Banknifty Options Strategy


What is Banknifty?

Nifty is an index for the top 50 companies from National Stock Exchange.

Sensex is the index of the top 30 companies from the Bombay Stock Exchange (BSE).

Similarly, bank nifty is an index comprised of the 12 most liquid and largest cap stocks from the banking sector in the National Stock Exchange (NSE).

Let us explore how bank nifty is formed, a successful trading strategy to trade Banknifty, and a corresponding options trading strategy.

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Banknifty Live Chart Today

A live chart is essential to take intraday trades. There are many sources to get a live graph of Banknifty. Tradingview provides a simple and interactive live chart.

Access Banknifty Live Chart here.

Banknifty Margin Details

As per NSE's new margin rules, from 1-June-2021, traders should keep 75% of the peak margin available with the broker. By Sep 2021, the same rate goes to 100%, which means there is no extra leverage for intraday trading in Indian market conditions.

In other words, all brokers should collect a 100% margin from traders. None of the brokers will be able to provide any extra margin to intraday traders.

So, one can check the margin requirements with any broker as they are the same as mandated by SEBI. One can check the margin requirements with the below links

Zerodha Margin Calculator

Upstox Margin Calculator

Banknifty Historical Data

Backtesting helps traders to identify a good trading strategy. It also allows them to fine-tune their approach in volatile market conditions.

However, historical data is necessary to perform the backtesting. With a 15-min timeframe, one can access the last 3 months of data with Gocharting. The advantage of Gocharting is that it also provides an EOD market profile chart for free users.

A trader can access up to 6 months of intraday data (in 15-min timeframe) in Tradingview.

NSE also provides historical data (at the EOD level) here.

If you need 1-min intraday data from Jan 2008, visit the Trading Tuitions website.

Banknifty vs. Nifty

Banknifty is made up of only the top 12 banks from NSE. Whereas, Nifty is made up of top-50 companies from NSE, which also includes some Banks.

As compared to bank nifty, nifty displays calm, smooth and composed behavior on most trading days. Whereas, Banknifty is a beast and displays volatile swings on many trading days.

Hence, many day traders who have the intention of taking only 1-2 trades prefer nifty. In contrast, scalpers and traders who are happy to take more than 2 trades like bank nifty.

Banknifty Support and Resistance

Some traders underestimate support and resistance in intraday trading, thinking it is a basic trading concept. But simple things bring wonders in trading, and the support & resistance concept is not an exception.

In Banknifty intraday trading, there are two levels of support and resistance:

  1. Support & Resistance trend lines from the daily chart

  2. Previous Day High (PDH) and Previous Day Low (PDL) acts as support and resistance in the live market

Daily Chart Support & Resistance

Image 2 – Banknifty Resistance in Daily Chart
Image 2 – Banknifty Resistance in Daily Chart

If we look at the daily chart of Banknifty in image-2, there is a resistance trend line. It prevented the rise of price on 29-Apr-2021.

Image 3 – Banknifty Support in Daily Chart
Image 3 – Banknifty Support in Daily Chart

If we look at the daily chart of Banknifty in image-3, there is a clear support trend line. It prevented the fall of price on 29-Jan-2021.

Hence, it is apparent that support and resistance pivot levels play a crucial role in intraday trading.

A Banknifty intraday trader should note these price levels and oversee the price action carefully when the price reaches these levels.

PDH and PDL as Support & Resistance

Previous Day High (PDH) is also called ‘Unfair High.’ It indicates the presence of the last buyer on the previous day, and there are no more buyers at a higher level.

Hence, in a balanced market condition, there is a higher probability of the price acting as resistance.