Nifty in a confirmed downtrend. Our bias now changed to bearish

Since August 11th, Nifty has consistently produced red candles and remained below the EBR/EBL bands. However, we maintained our bullish covered call position because the predetermined reversal point (24054, as noted in earlier posts this month) was never breached. Yesterday, that moment finally arrived when Nifty formed another strong red candle and dropped to a daily low of 24025.

Simultaneously, the sell trigger for yesterday, according to our spreadsheet, was set at 24179, while Nifty closed at 24078, indicating that we remain in a bearish trend. Since our reversal point was breached, our strategy required us to adopt a contrary perspective and establish a covered put position, while maintaining the previously sold call option, as it is currently in a favorable profit zone.

Consequently, towards the end of yesterday's session, we exited the long futures position at 24110, incurring a loss of Rs. 48,204.00. We initiated a short futures position of 260 quantities at the same price of 24110 and simultaneously shorted 520 quantities of the 23900 August put at Rs. 43.00. This strategy has now raised our potential maximum profit from Rs. 81,000.00 to Rs. 92,500.00.

Currently, our combined position shows a booked loss of Rs 48,204.00 and an unrealized profit of Rs 54,821.00. Starting today, if Nifty drops near 23,900, we will close all positions for this month, aiming for a moderate profit. Conversely, if Nifty reverses and rises sharply due to short covering, our upside reversal point is set at 24,256.

Cheers and happy trading.