Muhurat Trading 2024: Muhurat Trading is a vibrant and symbolic stock market session in India, observed during Diwali, the festival of lights. The word “muhurat” signifies an auspicious moment, and participating in trading during this time is thought to usher in prosperity and good fortune for traders and investors alike.
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Muhurat Trading 2024 Significance
This unique event isn’t solely about chasing financial gains; it embodies a rich tradition, marking the start of a prosperous new year in the stock market. Scheduled for a concise one-hour window, Muhurat Trading can witness dynamic market movements. So, as the clock ticks down, traders should prepare for an exhilarating experience filled with the promise of new beginnings.
Muhurat Trading Time Today
The stock exchanges have slated Muhurat Trading (Diwali – Laxmi Pujan) for today, November 1, from 6 pm to 7 pm. Traders should be aware that all intraday positions will be auto-squared 15 minutes before the session ends, making strategic planning essential for same-day trades.
This trading session heralds the start of the Hindu calendar year, Samvat 2081.
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Muhurat Trading Strategy
Puneet Sharma, CEO and Fund Manager at Whitespace Alpha said that the one-hour session, steeped in tradition, typically attracts low volumes and less volatility, making it a great opportunity for tactical positioning rather than frenzied trading.
“While the markets may be playing it cool, the savvy investor can still have some fun with strategic moves like the butterfly option strategy. While markets are in a corrective phase, it’s the perfect time to play it smart, not aggressive,” Sharma added.
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Enter the Butterfly Strategy
Now, here’s where things get interesting. The butterfly options strategy is an ideal fit for this session. Think of it as a calculated dance where you’re limiting your risk but still positioning yourself for some upside.
Here’s the structure according to Sharma;
- Buy one call option with a lower strike.
- Sell two call options at the middle strike.
- Buy one call option with a higher strike.
“This setup lets you profit if the market stays stable, which is highly likely during Muhurat Trading. It’s like flying under the radar, staying within a well-defined range while minimising your downside risk,” Sharma added.
Why This Strategy?
1. Low Volatility, High Precision: Muhurat Trading is not the time for big moves, and that’s where the butterfly spread excels. You’re betting on the market staying within a range, which is typically the case during this session. It’s like planning a party where you already know most guests won’t make a scene!
2. Limited Risk, Defined Reward: The beauty of this strategy is that your risk is capped. You know exactly what you’re putting on the table, and in exchange, you get a defined reward if the market stays where you expect it.
3. Time Decay Works for You: Options are all about timing, and during this short session, theta decay (time decay) is your friend. The sold options will lose value quickly, adding to your potential gains without much effort. It’s like letting time work its magic while you sit back and enjoy.
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The Big Picture
In a market that’s going through a correction, it’s essential to play with risk control in mind. The butterfly strategy during Muhurat Trading lets you engage with the market while maintaining a balanced approach. It’s not about chasing wild returns—it’s about smart positioning, Sharma pointed out.
