F&O Radar: Deploy Short Strangle in Nifty to capitalize on Theta decay
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The downturn that began in late September 2024, after Nifty hit an all-time high of 26,277, has finally taken a pause. A congestion zone, originally formed during the March-May 2024 consolidation, provided support around 21,900, where Nifty recently found a cushion at 21,964. This five-month decline, amounting to a 16.4% correction, ranks among the longest and steepest in recent history, with only three past instances exceeding this duration. The impact has been particularly severe on high-beta stocks, with Mid and Small Caps bearing the brunt of the selloff. “Since last Monday, however, Midcaps—which were deeply oversold—have shown early signs of recovery, helping improve overall market sentiment. This bullish push has allowed Nifty to reclaim the 22,500 mark,” believes Sahaj Agrawal, Senior Vice President: Head of Derivatives Research at Kotak Securities. On the upside, 22,800 serves as the next major resistance, having acted as a suppo...