Adjustment theory can be applicable at any index and will apply on expiry day. Now point is what is adjustment and how it will help you to trade so guys as it name adjustment, at the end of day market will not so much volatile ( most of the day ) and it only move in a range. When market in range both the premium call and put will decay and at the end of day at the money premium will be 2-3 rupee | out of the money premium will be 0
In the below image Time is : 2.55 | Market at: 22500 | Index: Nifty50
If market will expire at 22500 and market have 40 minute to expire now see the premiums
| 22500 CE | 9.25 |
| 22500 PE | 8.65 |
Case -1 Market make a green candle and increase CE premium and decrease PE premium.
We took an example of possibilities not shown exact premiums
| 22500 CE | 14 |
| 22500 PE | 3 |
Make sure be the punctual for your target, stop loss and risk management
How will trade in Adjustment Theory
Case -2 : When market will go down CE premium decrease and PE premium increase
We took an example of possibilities not shown exact premiums
| 22500 CE | 4 |
| 22500 PE | 13 |
and when both premium will 2 – 3 stop to take trades or can be stop at 3.20 in very rare case market will show any momentum after 3.30 so please avoid trading after 3.20
Rules for Adjustment Theory
- can be start at 2.40
- Avoid trad after 3.20
- Expected ROI will 100% and set cost to cost after price go up
- Follow proper risk management
- Do paper work first
