Mitesh Patel is a well-known Indian options trader recognized for his aggressive yet disciplined trading style, particularly in the Futures and Options (F&O) segment, with a focus on Bank Nifty options. Below is a detailed overview of his trading strategy based on available information from web sources and posts on X:
Overview of Mitesh Patel’s Trading Strategy
Patel’s approach is rooted in directional option selling, leveraging technical analysis to identify key market levels and manage risk effectively. He emphasizes simplicity, discipline, position sizing, and risk management over complex strategies or reliance on option Greeks. His strategy is primarily applied to weekly Bank Nifty options, with a focus on achieving consistent returns through theta decay and market direction.
Key Components of His Strategy
- Directional Option Selling:
- Patel primarily sells options (puts or calls) based on the market’s direction, avoiding option buying due to its higher risk. He has stated that 90% of his profits come from option selling.moneycontrol.commoneycontrol.com
- Entry Strategy:
- He identifies support and resistance levels using daily and 75-minute charts. These levels guide his trade entries.
- If the Bank Nifty reverses from a support level (e.g., 26,500), he sells a put option 1% away from that level (e.g., 26,200 Put). Similarly, if it falls after testing resistance, he sells a call option 1% away from the resistance.moneycontrol.commoneycontrol.compdfcoffee.com
- He avoids non-directional strategies (like straddles or strangles) as they offer lower returns, though they may have a higher probability of profit.moneycontrol.comscribd.com
- Exit Strategy:
- Exits when the option premium loses 80% of its value (e.g., if sold at 50-60, exit at 5-10).moneycontrol.commoneycontrol.com
- Cuts positions immediately if the market breaks the identified trend (support/resistance), regardless of profit or loss, to limit risk.moneycontrol.compdfcoffee.com
- On Wednesdays (one day before expiry), he reduces open positions, keeping ~80% of capital free to manage expiry-day volatility. He only initiates sell positions on Tuesdays if volatility is high.moneycontrol.commoneycontrol.com
- Position Sizing and Capital Allocation:
- Patel emphasizes position sizing as a critical factor for consistency. On the first day of a new expiry, he deploys only 30% of his capital.moneycontrol.commoneycontrol.compdfcoffee.com
- He pyramids positions (adds to trades) on subsequent days if the trend aligns, but avoids over-leveraging.pdfcoffee.com
- For expiry-day trading, he uses 10x leverage to sell low-premium options (2-4 Rs) in large quantities, aiming for ~1% weekly returns.threadreaderapp.com
- He advises keeping losses small by never averaging losing positions and using strict stop-losses based on option levels or Bank Nifty futures levels.pdfcoffee.compdfcoffee.com
- Technical Analysis and Chart Patterns:
- Patel relies on price action and candlestick patterns to identify momentum and breakouts. He tracks high/low of weekly candles and uses volume analysis to confirm trends.elearnmarkets.comscribd.compdfcoffee.com
- He focuses on support/resistance levels and avoids overcomplicating with indicators like RSI or excessive reliance on Greeks.pdfcoffee.compdfcoffee.com
- Example: He looks for consolidation patterns or breakout validations (e.g., Bharti Airtel sustaining above 480) and advises waiting for pattern confirmation before entering trades.pdfcoffee.com
- Risk Management:
- Patel stresses cutting losses quickly and not holding losing positions overnight without proper hedging.pdfcoffee.compdfcoffee.com
- He limits option buying to 5% of capital to control risk, having learned from a significant loss (Rs 26 lakh to Rs 1 lakh) due to greed in option buying.moneycontrol.commoneycontrol.com
- He uses theta decay to lower stop-loss levels, allowing time to work in his favor for option selling.pdfcoffee.com
- He advises against following “Twitter gurus” blindly and emphasizes understanding market levels and trends.pdfcoffee.com
- Return Targets:
- Weekly target: 1% per week by selling high-premium options, though adjustments often lead to higher returns (~4-5% monthly).moneycontrol.commoneycontrol.com
- Monthly target: 2% easily achievable with index options, up to 4-5% with low risk for skilled traders. Beginners should aim for 0.5% weekly.pdfcoffee.com
- Patel claims to have achieved significant compounding, reportedly turning Rs 20,000 into Rs 26 lakh in 9 months and later Rs 45 lakh into Rs 100 crore over 6 years, though these claims have faced skepticism and allegations of manipulated proof.reddit.com
- Expiry Day Trading:
- Expiry days are highly volatile, so Patel has adapted his strategy to avoid overexposure. He uses leverage to sell low-cost options (8-12 Rs on normal days, 2-4 Rs on expiry) with large quantities to capitalize on theta decay.threadreaderapp.com
- He advises against copying others’ expiry-day strategies and recommends developing a personalized approach based on 1-2 patterns.pdfcoffee.com
- Other Insights:
- Patel avoids complex strategies like straddles or strangles, focusing on directional trades for higher returns.moneycontrol.comscribd.com
- He downplays the importance of Implied Volatility (IV) and Greeks, arguing that option premiums cool off when news is priced in.pdfcoffee.com
- For beginners, he suggests sticking to a single pattern (e.g., rectangle border for stop-loss) and focusing on learning market trends.pdfcoffee.com
- He uses collateral from fixed deposits or debt funds (6-7% yearly return) to trade intraday or on expiry days with leverage, aiming for consistent weekly returns of 0.2-0.3%.threadreaderapp.com
Additional Context
- Background: Patel, a chemical engineer, started trading in 2005 and became a full-time trader in December 2017 after quitting his job. His early losses in 2008 and a significant drawdown in 2017 taught him the importance of discipline and risk management.moneycontrol.comelearnmarkets.commoneycontrol.com
- Social Media Presence: Known as @Mitesh_Engr on X, Patel shares pre- and post-trade insights, focusing on stocks and indices like Bank Nifty, HDFC Bank, and Bharti Airtel. He has a large following (422,496 as of 2023) but does not offer paid tips or active Telegram channels.stockinforce.com
- Controversy: Some X posts claim Patel posted a photoshopped profit screenshot, leading to skepticism about his reported gains (e.g., Rs 5 crore or Rs 10 crore in a single day). These claims lack verification and should be treated as inconclusive.reddit.com
Critical Notes
- Skepticism Around Claims: While Patel’s strategy is well-documented, extraordinary profit claims (e.g., Rs 45 lakh to Rs 100 crore) have been questioned for lack of transparency and possible manipulation. Always verify such claims independently.reddit.com
- Market Conditions: His strategy worked well in 2016-2018 when Bank Nifty moved 300-500 points daily and VIX was below 15. In high-volatility markets, retail traders may find it harder to replicate due to increased competition and algo-driven trading.threadreaderapp.com
- Risk Warning: Option selling carries high risk, especially with leverage. Patel’s success stems from experience, discipline, and quick exits, which may not be replicable for beginners without significant practice.
Summary
Mitesh Patel’s trading strategy revolves around selling directional options on Bank Nifty, using support/resistance levels from daily and 75-minute charts, with strict position sizing (30% capital initially) and risk management (cutting losses at trend breaks, exiting at 80% premium decay). He targets 1% weekly or 4-5% monthly returns, leveraging theta decay and avoiding complex strategies or excessive reliance on Greeks. His approach emphasizes simplicity, discipline, and consistency, but extraordinary profit claims should be approached with caution due to unverified allegations of manipulation.
For further details, you can explore his interviews on Moneycontrol or his X posts under @Mitesh_Engr. Always conduct your own research and consult a financial advisor before adopting any trading strategy.