Santosh Pasi
Bajaj Auto is in a bearish to sideways trend based on price action. Considering Open Interest Analysis, the highest open interest in the OTM PUT strike is at 8700 and the highest open interest in the OTM CALL strike is at 10,000. Considering price action and open interest analysis, we assume our profitable range of 9,035 (-4.2 percent) to 9,865 (+4.5 percent) should be reasonable. The probability of profit for this trade is around 50 percent.
Although we have a limited loss, following our adjustment will reduce loss in the direction of the trend and increase profit potential.
If it opens gaps up or down (before initiating trade), you can change all strikes accordingly to reflect the same change and ensure the credit received is similar or higher.
You may wish to close this trade if the profit exceeds 50% of the maximum profit potential. Avoid carrying this trade in the last week of expiry.
Currently, volatility is very high. Its earning result is expected on July 16. We expect a drop in the volatility and an increase in the theta rate to benefit this strategy trade.
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