Bank Nifty Future And Option Trading With Technical Trend And Analysis

By Author: Arthur Jackson
Total Articles: 18
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A futures contract is a forward contract, which is traded on an Exchange. Bank Nifty futures contract would be based on the index Bank Nifty where the underlying index is Bank nifty. It comprises of most liquid banking stocks listed on National stock exchange. So this particular index provides trader, investor and market intermediaries with a benchmark that captures the capital market performance of Indian Banks. The bank nifty index comprises of 12 (private and public) most liquid stocks from banking sector which trade on National Stock Exchange.

Like the Nifty future trading in national stock exchange, Bank nifty future can be traded on NSE. Those who know Bank Nifty Trend is bullish can buy Bank Nifty futures comprising 40 shares. Bears or those who thinks Trend is in bearish mode, they can short sell bank nifty. First you have to know the trend of bank nifty by Technical Analysis and news which is updated daily on “Bank Nifty Trend” so that you can make a trading strategy, weather to buy “Call or Put Option”. In case of bullish Trend trader can buy a “Call Option” and in case of bearish trend one can buy ...
... a “Put Option”. Here one can find daily Technical analysis, technical trend of bank nifty, support, and resistance of bank nifty and financial news which can affect its trend. Individual banking stocks trend can be known from bank nifty trend as it comprises of an index of banking stocks.

Contracts

Bank Nifty future contracts have a maximum of 3-month trading cycle- The near month (1), the next month (2) and the far month (3). Anew contract is introduced on the trading day following the expiry of the near month contract. Then the new contract will be introduced for three month duration. In this way, at any point of time there will be 3 contracts available for trading in the market. The price step in respect of Bank nifty Future contracts is Rs.0.05.

Expiry

Same as Nifty future contract, Bank nifty Future contracts expire on the last Thursday of the expiry month. If last Thursday is a trading holiday, the contracts expire on the previous trading day.

Base price and Price bands

Base price of Bank Nifty futures contracts on the first day of trading would be theoretical futures price. The base price of the contracts on subsequent trading days would be the daily settlement price of the futures contracts.

Price bands

There is no day minimum or maximum price ranges applicable for Bank nifty futures contracts. However, in order to prevent erroneous order entry by trading members, operating ranges are kept at +/- 10 %. In respect of orders which have come under price freeze, members would be required to confirm to the Exchange that there is no inadvertent error in the order entry and that the order is genuine. On such confirmation the Exchange may approve such order.

Beta of Bank Nifty is more than Nifty, so it is more volatile than Nifty. Most technical trader generally tracks Bank Nifty Trend to monitor the banking stock performance.

Mr. Arthur Jackson, Technical Analyst and Founder of Nifty Trend providing trading advisory services in Bank Nifty Trend, Equity, Derivatives and Commodity market. He also made a guest appearance in various workshops which were conducted on stock market awareness.