Examples of Smart Scalping Strategies

10.1. Moving Averages

Here is the moving average diagram for the hypothetical stock price trend:

• Blue Line: Represents the simulated stock price trend over time.
• Orange Line: The 5-day moving average, indicating short-term price trends.
• Green Line: The 20-day moving average, showing long-term price trends.
• Red Horizontal Lines: Represent the breakeven points for the short strangle strategy (₹9,360 and ₹10,640).

Let’s assume a stock is trading at ₹10,000. You decide to sell a call option with a strike price of ₹10,500 and a put option with a strike price of ₹9,500, both with the same expiration date.

1. Sell a call option at ₹10,500.
2. Sell a put option at ₹9,500.

By selling these options, you collect the premiums, let’s say ₹80 for the call and ₹60 for the put, totalling ₹140.

Potential Outcomes:

• Maximum Profit: The maximum profit is the total premium collected, which is ₹140 in this case.
• Break-even Points: The stock price needs to stay between ₹9,360 (₹9,500 – ₹140) and ₹10,640 (₹10,500 + ₹140) for you to break even.
• Risk: The risk is unlimited because if the stock price moves significantly above ₹10,640 or below ₹9,360, you will start to incur losses

10.2. Relative Strength Index

Objective:

Scalp short-term Call Options or Put Options using RSI reversals on the underlying index on a 1-minute chart.

Setup Parameters:

• Underlying: Nifty 50 (Spot)
• Option Instrument: At-The-Money (ATM) Weekly Option
• Timeframe: 1-minute
• RSI Settings: 7-period
• Indicators: RSI + Price Action + Volume (optional VWAP)
• Strategy Type: Intraday Scalping

Let’s say:

Here’s the payoff chart for the RSI-based options scalping strategy. It visually represents your potential outcomes: a ₹10 profit if the trade moves in your favor quickly, or a ₹6 loss if the setup fails and hits your stop-loss. The x-axis represents price movement over time, while the y-axis shows the payoff in rupees.

• Nifty is at 22,000
• RSI (7) drops to 25, then crosses back above 30 on the 1-minute chart
• This is seen near a minor support zone
• You scalp the 22,000 CE (Call Option) at ₹100
• Exit target is ₹110
• Stop-loss is ₹94

Entry & Exit Rules:

Entry: Buy ATM Call when RSI crosses above 30 from below (oversold bounce).

Exit:

• Target: ₹10 profit (scalp)
• Stop-loss: ₹6 loss
• Time-bound: Exit if trade doesn’t move in 3–5 minutes.