How To Adjust Your Trading Plan After Banknifty Weekly Expiries Withdrawal

So, after the SEBI order, NSE the a bombshell: no more weekly expiries for most contracts, including the popular Bank Nifty. This is a big deal, folks! It's like changing the game's rules while you're still playing.

What does this mean for you, the trader? Well, it's time to dust off your thinking cap and adjust your game plan. With the absence of weekly expiries, we can expect some changes in market behaviour. Volatility might swing, sentiment could shift, and trading patterns might change.

In this article, we'll explore strategies to help you adapt to this new market landscape. But before that let's understand, what are the potential impact this change will have on our trading activities.

Let's dive in!

Understanding the Implications of Weekly Expiry Withdrawal

The NSE's decision to eliminate weekly expiries for most contracts, including the popular Bank Nifty, has sent ripples through the trading community. This significant change is likely to have far-reaching implications for market dynamics, volatility, liquidity, and trading strategies.

One of the most immediate consequences of this move is a potential shift in market volatility.

Without the added excitement and uncertainty of weekly expiries, the market may experience periods of relative calm. However, this could also lead to more pronounced price swings when significant news or events occur, as traders may be less accustomed to absorbing large price movements.

Liquidity, the ease with which an asset can be bought or sold, is another factor that may be affected.

With fewer contracts expiring weekly, trading activity could be reduced, potentially making it more challenging to enter or exit positions at desired prices. This could be particularly noticeable for less liquid instruments or during periods of market stress.

The impact on trading strategies is perhaps the most significant area of concern. Many traders have developed strategies that rely heavily on weekly expiries, such as calendar spreads, straddles, and strangles. These strategies may no longer be as effective or profitable in the absence of weekly expirations. Traders will need to adapt their approaches and explore alternative strategies that align with the new market landscape.

In this article, I will not share some of the strategies that I will include in my trading plan after the withdrawal of Banknifty weekly expiries.

Adjusting Your Trading Strategy for the New Landscape

If you are following social media, you must have seen that all are talking about the old golden days of smooth theta decay. People are expecting that those days will come again after we have only one expiry remaining.

But I have a different thought on it.

What I have observed in my 14+ years of trading career is that the stock market is dynamic. It keeps changing its nature and once a change has been shifted, it never went back to its previous nature.

So forgot about that smooth theta decay and accepted the truth that a new landscape will bring new opportunities as well as new challenges.

One of the best ways to deal with this new landscape is: to change your trading approach.

Instead of focusing only on one time frame or one asset class, diversify your trading activity.

If you are an options trader and only following weekly strategies, start considering monthly expiries.

If you are only trading in indices, start looking at stock strategies.

After all as a trader, our first goal is to make money while keeping our risk on the limited side. No matter what asset class or time frame we are following to date.

Now how to do that?

The answer is simple but requires your timely action. The answer is: Start Learning.

You should start learning the basics of options pricing. You should also learn about how we can create positional strategies while keeping our risk on the limited side.

Now creating a positional strategy is not sufficient. Timely adjustments also required because anytime market can surprise you with its unexpected movement.

So learning about adjustments is also important.

There are so many resources available from where you can learn but learning from a mentor is the best way to bring some real results in your trading journey.

We too have a mentorship program from where you can learn these option hedging strategies from very basics to advanced including adjustments.

So in short:

1. If you are following only intraday strategies then start following positional strategies also.
2. If you are following only weekly strategies then start following monthly strategies.
3. If you are following only indices then start following stock strategies too.

By following above, you can create diversification in your trading and you will find a more stable portfolio even in high volatility.

If you need any help or have any questions, feel free to contact us.

Conclusion: Navigating the New Market Landscape

The elimination of weekly expiries marks a significant paradigm shift in the trading landscape. While some may lament the passing of familiar patterns, it's imperative to recognize that the market is dynamic and ever-evolving. The new landscape presents both challenges and opportunities, and those who can adapt and innovate will be best positioned to succeed.

One of the most effective strategies to navigate this changing environment is to diversify your trading strategies. Instead of relying solely on one time frame or asset class, consider exploring new avenues. For example, if you're an options trader accustomed to weekly strategies, delve into monthly expiries. If you primarily trade indices, explore stock strategies.

Remember, the ultimate goal is to generate profits while managing risk effectively. To achieve this, education and continuous learning are paramount. Understanding the basics of options pricing, creating positional strategies, and learning to make timely adjustments will equip you with the tools to navigate the new landscape successfully.

To enhance your learning journey and unlock the full potential of options trading, consider enrolling in our Option Strategies: A Mentorship Program 4.0. Our comprehensive program offers expert guidance, hands-on training, and a supportive community to help you master advanced options strategies and achieve sustainable success.

By embracing diversification, education, and our mentorship program, you can position yourself to thrive in the evolving market. Remember, the future belongs to those who can adapt and seize the opportunities that arise.