BTST option confluence
BTST option buying holds an option overnight to catch the next morning's gap. This version decides direction with a five-point trend score at 15:00: VWAP, RSI, daily ADX, an EMA crossover and Supertrend, all read on NIFTY futures. If at least four agree, it buys a call or put one strike out of the money on a weekly expiry that is not about to expire, then sells at 09:40 the next session.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
In this test BTST option buying lived on big overnight moves. When NIFTY moved more than 1% while the option was held it made money in both directions, ₹52,296 over 16 rises and ₹76,132 over 28 falls, but the 95 quieter nights lost ₹68,087 to time decay. Entries after India VIX closed above 14.5 (still under the 20 cap) earned ₹69,787 over 29 trades, while normal VIX days lost ₹14,874 over 71. Trend days made ₹64,562 over 50 trades and quiet days lost ₹10,502 over 58. Strong closes in nervous markets carried into the next open; mild ones faded overnight.
About this strategy
- Skip the day if yesterday's India VIX closed above 20, or if yesterday was a futures expiry (the rolled futures series jumps and disturbs the indicators).
- At 15:00, score five checks on the near-month NIFTY future: price versus the session VWAP; RSI(14) of 15-minute closes above 55 or below 45; yesterday's daily ADX(14) above 20, voting with the stronger DI line; 15-minute EMA 9 versus EMA 21; and 15-minute Supertrend(10, 3) direction.
- Four or more bullish votes: buy the call one strike above ATM. Four or more bearish votes: buy the put one strike below ATM. One lot.
- Use the nearest weekly expiry that does not expire today or the next session, so the option is never in its expiry morning.
- No stop loss by default; hold overnight.
- Sell the option at 09:40 the next trading session.
Why traders use it
When a session closes with a strong trend, the next morning often opens in the same direction, and a bought option can gain from that gap without the margin needed for futures. Requiring four of five independent trend tools to agree tries to keep only the days with real conviction. The VIX filter avoids paying inflated premiums on nervous days, and choosing a later weekly expiry limits overnight time decay. It is a popular, low-capital way to take a view on the next day's open.
The year in plain words
On NIFTY from 1 Oct 2025 to 30 Sep 2026 with default settings, the strategy bought 142 overnight options, won 48% of them and made ₹70,171 before costs (profit factor 1.34). After ₹20 per order and bid-ask slippage it made ₹61,620. Winners averaged about ₹4,031 against losers of ₹2,756, and the single best trade made ₹35,597. Every trade was closed at 09:40 the next day. Gains came in bursts: February made ₹36,636, March ₹33,150 and May ₹26,153, while April and July each lost about ₹17,500 to ₹18,000. Maximum drawdown was ₹36,244 before costs.
What the settings do
Risks
- There is no stop, so an adverse overnight gap takes the full loss on the bought option until 09:40.
- A few large winning nights account for much of the profit; the best trade alone was about half the year's total.
- Overnight time decay and any fall in implied volatility work against every trade.
- Five indicators drawn from the same price data often agree for the same reason, so the score is less independent than it looks.
Who it suits
Traders who want a rule-based overnight option trade with risk limited to the premium paid and can act at 15:00 and 09:40. It fits those who accept losing about half the nights for occasional large gap wins.
Questions traders ask
What is BTST in options?
BTST means buy today, sell tomorrow. In options it usually means buying a call or put shortly before the close and selling it the next morning to capture the overnight gap. The most you can lose is the premium paid, but time decay and volatility changes overnight also affect the price.
Is BTST option buying profitable on NIFTY?
In this backtest from 1 Oct 2025 to 30 Sep 2026 it made ₹70,171 before costs and ₹61,620 after ₹20 per order and bid-ask slippage, with statutory charges excluded. Results were uneven, with strong months in February, March and May. Past results do not guarantee future ones.
Why skip high VIX days?
When India VIX is high, option premiums are inflated, so a bought option needs a larger move just to break even, and volatility can drop overnight. Skipping days after a VIX close above 20 avoids paying those prices.
Why not use the expiring weekly option?
An option that expires the next session has very little time value and decays sharply overnight. The rules choose the next weekly instead, which costs a little more but loses less value while it is held.