How Does the 23-Dec-2025 Nifty Expiry Setup Favour a Short Strangle Strategy?
About the Current Expiry Context
As the 23-Dec-2025 expiry approaches, market participants are increasingly focused on how price, open interest, and volatility are aligning across timeframes. The broader monthly structure continues to exhibit a neutral-to-positive bias, suggesting that while the upside potential remains open, aggressive directional conviction is still absent. At the same time, the weekly structure, which had shown corrective tendencies, is now being challenged, particularly if momentum sustains above the 26220 zone. This blend of stability at higher timeframes and tactical churn at lower timeframes creates a favourable environment for non-directional, premium-based strategies.
Expiry trading is less about prediction and more about probability management. As expiration nears, the market’s focus shifts from narrative-driven moves to positioning, payoff optimisation, and risk containment. In the current setup, the Nifty has demonstrated an ability to remain range-bound despite intermittent attempts at breakout. Such behaviour often reflects a balance between buyers and sellers, where neither side has sufficient urgency to force a sustained directional move before expiry.
Key Observations From Price and OI Structure
🔹 Monthly setup continues to lean neutral to positive, indicating structural support.
🔹 Weekly corrective bias weakens if price holds above 26220.
🔹 Heavy call open interest is concentrated around the 26200 strike.
🔹 Put writers are active near the 26100 strike.
🔹 Expiry range is well defined between 26050 and 26200.
The open interest build-up provides critical insight into market expectations. The presence of strong call writing near 26200 suggests that option writers expect this level to act as a ceiling for the current series. Simultaneously, the accumulation of put positions around 26100 reflects confidence in downside protection near that zone. Together, these levels form a narrow corridor where the majority of market participants appear comfortable carrying risk into expiry.
Such OI structures are rarely accidental. They emerge from repeated market feedback where attempts to breach either side of the range are met with supply or demand. As expiry approaches, these structures often tighten further, compressing realised volatility and accelerating time decay. For option sellers, this is the environment where probability, rather than price prediction, becomes the dominant edge.
The projected expiry range of 26050 to 26200 reinforces the case for a non-directional stance. While intraday spikes and pullbacks may occur, the broader settlement expectation remains contained within this band. When such clarity exists, strategies that monetise time decay while maintaining defined risk parameters tend to perform better than aggressive directional bets.
Why a Short Strangle Fits This Setup
| Market Feature | Strategic Implication |
| Defined Expiry Range | Favourable for selling out-of-the-money options |
| OI Concentration | Acts as natural price magnet into expiry |
| Moderate Volatility | Enhances theta decay for option sellers |
| Neutral Bias | Reduces probability of runaway directional moves |
The suggested strategy involves selling the NIFTY 23DEC2025 26300 Call and selling the NIFTY 23DEC2025 25950 Put. This creates a short strangle positioned comfortably outside the expected expiry range. The total premium inflow of approximately 17.45 points reflects the market’s pricing of risk at these strikes. The logic is straightforward: as long as Nifty remains within the projected band, both options decay rapidly into expiry.
Risk management remains central to this approach. The defined stop-loss at 34 points ensures that losses are capped if the market unexpectedly expands beyond the anticipated range. This asymmetric payoff structure, limited risk against high probability of premium retention, is what makes the short strangle attractive in such expiry setups.
It is important to recognise that short strangles are not passive trades. While the probability of success may be high, monitoring is essential. Sudden volatility expansion, triggered by macro cues or global market moves, can temporarily distort price behaviour. In such scenarios, adherence to predefined risk limits is non-negotiable.
From a psychological standpoint, expiry trading tests discipline. Traders are often tempted to over-adjust positions based on intraday noise. However, when the structural premise remains intact, patience tends to be rewarded. The edge lies not in reacting to every tick, but in trusting the broader framework built from OI, range analysis, and volatility assessment.
For participants who integrate index strategies with disciplined execution, aligning such trades with broader index insights can enhance consistency. Many traders complement expiry-specific setups with structured index guidance.
As expiry day approaches, theta decay accelerates, and the value of patience increases. Strategies like short strangles benefit disproportionately from this time compression, provided price remains range-bound. This is why such setups are often preferred by experienced traders during calm-to-moderate volatility regimes.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP® emphasises that expiry trading rewards structure over speculation. The 23-Dec-2025 Nifty setup, with its clearly defined range and supportive OI structure, lends itself well to a disciplined short strangle approach. Success lies in respecting risk limits, avoiding overtrading, and allowing probability to play out. Read ongoing market insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Nifty Expiry Strategies
How does open interest help define expiry ranges?
When is a short strangle preferable to directional trades?
How should stop-loss be managed in expiry strategies?
What role does volatility play near expiry?
Why do range-bound markets favour option sellers?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
