25 Rules for Bank Nifty Options Trading: Risk, Entry, Exit & Mental Framework

Risk Rules (1-8)

1. Never risk more than 2% per trade. With ₹5L capital, max loss per trade = ₹10,000.
2. Always use a stop-loss. Set it BEFORE entering the trade, not after. Use GTT orders.
3. No naked selling without ₹5L+ capital. Below ₹5L, use only buying strategies and spreads.
4. Max 2 lots per ₹5L capital. Scale up only as account grows from profits.
5. No overnight positions without hedges. If you hold overnight, every position must have a protective leg.
6. Daily loss limit = 2% of capital. Hit it → stop for the day. No exceptions.
7. Weekly loss limit = 5%. Hit it → reduce position size by 50% for rest of week.
8. Monthly loss limit = 10%. Hit it → stop for 1 week. Review all trades before resuming.

Entry Rules (9-16)

9. Trade only liquid strikes. Open interest must exceed 5 lakh. Illiquid strikes have wide spreads that eat profits.
10. Enter after 9:20 AM, never at 9:15. The opening 5 minutes have erratic prices and wide spreads.
11. Check VIX before selling premium. Below 12: avoid selling (premiums too thin). 12-18: ideal selling zone. Above 18: sell only with hedges.
12. Verify OI supports your trade. If you are selling 53,500 CE, confirm that 53,500 has high call OI (resistance). Do not sell at random strikes.
13. No entry before major events unless hedged. RBI, budget, US Fed, bank earnings — either hedge or sit out.
14. Use limit orders, not market orders. Market orders on Bank Nifty options give ₹2-5 worse fills due to wide bid-ask.
15. Check bid-ask spread. If spread exceeds ₹5, skip the strike. Choose a more liquid nearby strike.
16. Never chase a move. If Bank Nifty has already moved 200+ points, the edge is gone. Wait for the next setup.

Exit Rules (17-21)

17. Exit at pre-defined SL, no exceptions. "It will come back" is the most expensive sentence in trading.
18. Take partial profits at 50% target. Close half the position at 50% of your target. Trail the rest.
19. Close everything by 3:15 PM. Holding into the last 15 minutes adds gamma risk without proportional reward.
20. Never average a losing position. Adding to a loser doubles your risk on a trade that is already wrong.
21. Exit immediately if VIX spikes 15%+ during your trade. A VIX spike means the market dynamic has changed fundamentally.

Mental Rules (22-25)

22. No revenge trading after losses. The next trade should be based on your system, not on recovering the previous loss.
23. Log every trade in a journal. Date, strategy, entry, exit, P&L, reasoning, emotional state. Review weekly.
24. Review trades every Sunday. 30 minutes: what worked, what did not, what to improve next week.
25. Take 1 full week off after hitting monthly loss limit. Trading while tilted compounds losses. Rest, reset, return.

Frequently Asked Questions