Swing Trading -Stock Options StrategySwing Trading Strategy – Stock Options:-
Tools Used: 9 SMA, RSI, Market Structure
Stock Universe: 25 Pre-Selected High Beta, Highly Liquid F&O Stocks
🔒 No further filtering or stock selection is required. Trade only within this universe.
✅ Strategy Overview
This is a swing trading strategy focused on buying stock options, using a systematic multi-timeframe confirmation approach involving:
• 9-period Simple Moving Average (9 SMA)
• Relative Strength Index (RSI)
• Market Structure
📌 Rules of Engagement
1. 📅 Monthly Timeframe – Primary Trend Filter
• The monthly candle must close above the 9 SMA.
• The RSI must be greater than 50 on the monthly chart.
2. 📆 Weekly and Daily Timeframes – Trend Confirmation
• Both weekly and daily candles must close above the 9 SMA.
• The RSI must be above 50 on both the weekly and daily charts.
3. 🕒 Entry Trigger – 15-Minute Chart (Execution Timeframe)
Once higher timeframes align:
• Switch to the 15-minute chart.
• Wait for a pullback to the 9 SMA, and enter near this level.
4. 🛡️ Stop Loss – Initial Risk Management
• Set the stop loss just below the low of the daily candle that first closed above the 9 SMA.
5. 🏁 Exit & Re-Entry Criteria
• Exit the position if the daily candle closes below the 9 SMA.
• Re-enter only when the full setup aligns again across all timeframes.
🔁 Profit Trailing Strategy
🔒 Step 1: Lock-In at Cost
• After three consecutive bullish daily candles, trail your SL to breakeven (your entry price).
📉 Step 2: Dynamic Trailing
• For every 5 bullish daily candles,
➤ Trail your SL to the lowest low of the 1st candle in that group.
• Continue this until a daily close below the 9 SMA, at which point exit completely.
⏰ Option Expiry Guidelines
• Enter trades only after 2 days of expiry (e.g., from Friday onwards for weekly expiry on Thursday).
• Exit trades before the last 2 days of expiry to avoid theta decay.
• Choose liquid strike prices in 0.5 or 1-point intervals.
▸ Example: If the stock is at ₹439, pick ₹400 ITM or ₹450 for better liquidity.
⚠️ Additional Notes
• Strictly trade within the 25 pre-identified high beta, liquid F&O stocks.
• This strategy performs best in trending markets.
• Avoid overtrading or deviating from the setup rules.
• Maintain a trading journal to track entries, exits, and stop loss adjustments.
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📊 High Beta, Liquid F&O Stocks (Current List)
Adani Enterprises Adani Power Axis Bank IndusInd Bank Bajaj Finance Kotak Mahindra Bank HDFC Bank Tata Motors Larsen & Toubro JSW Steel Reliance Industries IndiGo Tech Mahindra Titan Sun Pharma Cipla Bajaj Finserv BPCL Mahindra & Mahindra Aurobindo Pharma Dr Reddy’s Laboratories Shriram Finance Lupin Container Corporation (Concor) Siemens
VIMP - Same process will be followed for Downtrend/PE buying. Montly candle must give its closing below 9 SMA with RSI 50 crossing below.
