1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures - Bac

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

Idea for the Option Analysis Tool

I have been thinking about this Option tool but the logic based on the Open Interest and Price action did not help because Open Interest is more a WISH of the operators or they can use the OI to create some false signal OR OI can be looked at more from a weekly perspective and cannot be used for Intraday. For Intraday or Daily purpose we have to look at the Volume.

For Example today I was watching the Option volume data for NIFTY, From 9:30 to 10:30 the Max volume in CE was in 5600 annd max volume in PE was in 5600 PE giving indication that market will stay in tight range or around 5600.

At around 10:20 the max volume in PE changed from 5600 to 5500 indicating that BULLS are now given hope for 5600 and trying to defend 5500.

When you consider the volume, we have to think from the Operator perspective and Options are used for hedging. To explain this further, When we say we have more volume in 5600 CE, that means, The positions are more "SELL" based. So the Operators (Here the Bears) are creating positions so that it would not cross 5600.

Please correct me if basic idea is wrong. Based on the above understanding we can develop a tool,

Which would give the overall Range.... and the direction

I would need suggestions and comments before I can develop this tool. Once again the data would be downloaded from NSEIndia.com.

As I type the max PE poistions once again created in 5600 PE (instead of 5500 PE). So the BULLs are hoping that market will not cross 5570 today and the bears will not let the market cross 5625-5630, unless new positions are made...

From an expiry perspective (OR Weekly perspective - Looking at the OI, the range would be 5500 to 5700. More open interest in 5700 CE indicating that the market would expire below 5700 and around 5600)

As per the Options data at 12:15 PM, the maximum volume for CE is at 5600 and maximum volume for PE is at 5600. So today market should close around 5600 levels. NF made a high of 5647. Today would be a real Test for the Strategy. If I am right as per the options data then the market should not move beyond 5650 because the maxium OI is at 5700 CE.

At 2:30 as per the Options data, the max volume for CE has shifted to 5700 CE, and the max volume for PE is at 5600. So we can expect a correction at the current level. CMP 5660. The Max OI is at the same level. So more or less the expiry lavels are getting formed, which indicates between 5600 and 5700. In the morning it was indicating near 5600.

I don't know if the Options data really works. But atleast for today it seems to be working

The thread got a little bit out of track because of our friend. Just wanted to put it back on track. The "Option Experts", Please let me know your suggestions. As I said I am not for using the Open Interest and the Price Action. If you feel differently please do... I don't want to spend some effort which would not be worth.

We can use this option tool for NIFTY, BANKNIFTY and Any Stock listed under F&O. To do the analysis we would need the Option chain data and the Futures data.

 

[prabhsingh]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

Raj,

I might be completely wrong but to my experience just looking at OI and Volume data for Options it would not be appropriate to take any position and run profit on continous basis.Yes OI can be used but only if there exists strong strategy in the background.

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

NIFTY Options Chain Analysis for 26-Jun-13

Max Volume at
CE : 5600 - 166 K
PE : 5600 - 193 K

Max Open Interest at
CE - 5700 - 99L
PE - 5600 - 86L

Conclusion : Initial Range 5570-5630

Looking at the OI, Go Short around 5630 SL 5650

As per FLOW, Go short below the Pivot of 5614 SPOT.

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

NIFTY Options Chain Analysis for 26-Jun-13

Max Volume at
CE : 5600 - 166 K
PE : 5600 - 193 K

Max Open Interest at
CE - 5700 - 99L
PE - 5600 - 86L

Conclusion : Initial Range 5570-5630

Looking at the OI, Go Short around 5630 SL 5650

As per FLOW, Go short below the Pivot of 5614 SPOT.

Max Volume for CE at 5700. That means the Short is confirmed now. Max volume previously at 5600 CE. Normally this is an indication (or confirmation) when the volume suddenly changes the Levels, meaning 5600 is gone so they have to defend 5700.
There is no position at 5500 PE, which indicates that the BULLS would defend 5600 today. So do not expect much downside. Play for just 30 points on either side

For Reversal we will have a similar setup... Look for a sudden spike in volume in 5500 PE, which would indicate a reversal from down to UP.

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

NIFTY Options Chain Analysis for 26-Jun-13

Max Volume at
CE : 5600 - 166 K
PE : 5600 - 193 K

Max Open Interest at
CE - 5700 - 99L
PE - 5600 - 86L

Conclusion : Initial Range 5570-5630

Looking at the OI, Go Short around 5630 SL 5650

As per FLOW, Go short below the Pivot of 5614 SPOT.

Max Volume for CE at 5700. That means the Short is confirmed now. Max volume previously at 5600 CE. Normally this is an indication (or confirmation) when the volume suddenly changes the Levels, meaning 5600 is gone so they have to defend 5700.
There is no position at 5500 PE, which indicates that the BULLS would defend 5600 today. So do not expect much downside. Play for just 30 points on either side

For Reversal we will have a similar setup... Look for a sudden spike in volume in 5500 PE, which would indicate a reversal from down to UP.

Option Analysis at 12:15 PM

Today's Range more or less seems to be filled. According to my calculation (doing a Weighted average based on the Top 3 Options Volume Position CE and PE), the downside is 5581 and upside is 5641.

But Range based on the OI seems (Top 5 volumes) to be pointing to 5571 to 5730. So there is some Upside left in this expiry. So if we get an opportunity around 5581 better to take long positions. Otherwise Go long above 5641

Options max volume changed from 5700 CE to 5600 CE. The rest remains the same.

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

Option Analysis at 12:15 PM

Today's Range more or less seems to be filled. According to my calculation (doing a Weighted average based on the Top 3 Options Volume Position CE and PE), the downside is 5581 and upside is 5641.

But Range based on the OI seems (Top 5 volumes) to be pointing to 5571 to 5730. So there is some Upside left in this expiry. So if we get an opportunity around 5581 better to take long positions. Otherwise Go long above 5641

Options max volume changed from 5700 CE to 5600 CE. The rest remains the same.

Options Analysis at 2:30 PM

Market is trading in the tight range of 30 points becuase the volume is concentrated at 5600 CE and PE, with a slightly a UPSide. For this Expiry below 5600 cannot be expected anymore. And above 5700 also cannot be expected. So the expiry would be around 5650. For today hope market would close around 5630 or our Range Max 5641 could be met

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

27-Jun-13.

Max CE Vol @ 5600
Max PE Vol @ 5600

Max CE OI @ 5800
Max PE OI @ 5600

OI CHG 5800 CE @ Minus 704K
OI CHG 5600 PE @ Plus 30 L

So the Bulls are heavily shorting 5600 PE to take the markets higher.
So no chance of going below 5600.

The Initial range according to my calculation is 5619 - 5675.

So you can go short @ 5675 or Long @ 5620.

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

27-Jun-13.

Max CE Vol @ 5600
Max PE Vol @ 5600

Max CE OI @ 5800
Max PE OI @ 5600

OI CHG 5800 CE @ Minus 704K
OI CHG 5600 PE @ Plus 30 L

So the Bulls are heavily shorting 5600 PE to take the markets higher.
So no chance of going below 5600.

The Initial range according to my calculation is 5619 - 5675.

So you can go short @ 5675 or Long @ 5620.

Max CE OI @ changed from 5800 to 5700 - Which is a confirmation that market will first touch the low before going up or it might be signal for Reversal from downside to upside

 

[dineshN]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

will you not consider July OI data for days like today! I always find very difficult to interpret OI table but recently your posts making me understanding it better. Thanks for the same!
Also I read somewhere, OI table many times throws wrong direction to trap traders, is it true?

 

[healthraj]

Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -

27-Jun-13.

Max CE Vol @ 5600
Max PE Vol @ 5600

Max CE OI @ 5800
Max PE OI @ 5600

OI CHG 5800 CE @ Minus 704K
OI CHG 5600 PE @ Plus 30 L

So the Bulls are heavily shorting 5600 PE to take the markets higher.
So no chance of going below 5600.

The Initial range according to my calculation is 5619 - 5675.

So you can go short @ 5675 or Long @ 5620.

Max CE OI @ changed from 5800 to 5700 - Which is a confirmation that market will first touch the low before going up or it might be signal for Reversal from downside to upside

In the last one hour the Open interest for PE has changed to Plus 36L (As I said before The operators use the Options to Hedge. So The data should be taken purely on a sell side. So 36L PE are being sold compared to Minus 570K in CE. Those who want to Go long, can go long above Yesterday's High Range of 5641, if it sustains