Nifty Open Interest Analysis
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OT Bro,
Is there any way to determine whether the change in OI that happened today for 5600 and 5700 PUT was that Short Covering or unwinding of PUT Accumulation.In today's newspaper it was stated FII buying heavily Put to headge their trades in Cash Segment.My question is how do brokerage firms decide such things.
Is there any way to determine whether the change in OI that happened today for 5600 and 5700 PUT was that Short Covering or unwinding of PUT Accumulation.In today's newspaper it was stated FII buying heavily Put to headge their trades in Cash Segment.My question is how do brokerage firms decide such things.
My feedback on how i am using options data.
I look at the data in the morning, before market opens or just after market opens. It gives me an idea of where the upper & lower limits of the market are. 5 min. chart also shows a likely movement direction. Based on this I decide on which option pairs(CE & PE) to watch for the day.
Trades are entered only on the buy side based on a combination of EMA 5 & 26/50 crossovers. Look for a target profit of 3,5 & 10%. Have been trying this out in march.
My main problem is that once i taste success i become greedy & keep hankering after 20% gain. So need to temper my greed & reduce temptations.
Will update in due course.
I look at the data in the morning, before market opens or just after market opens. It gives me an idea of where the upper & lower limits of the market are. 5 min. chart also shows a likely movement direction. Based on this I decide on which option pairs(CE & PE) to watch for the day.
Trades are entered only on the buy side based on a combination of EMA 5 & 26/50 crossovers. Look for a target profit of 3,5 & 10%. Have been trying this out in march.
My main problem is that once i taste success i become greedy & keep hankering after 20% gain. So need to temper my greed & reduce temptations.
Will update in due course.
Hi OT,
Have got into a habit of looking up the option chain for feel of the trend.
Do you agree with the following:
On the CE side, only 6000 has OI > 70 L, above it the conviction is weak. Meaning if 6000 breaks then it is strong bull on the upside.
But on the PE side, 5800, 5700, 5600, 5500 all have OI > 70L . Writers have conviction at these supports. So, breaking them won't be a one shot thing. Some major international news will be required.
The question then is: Is the Cyprus "legal scam" a news big enough? Some call it as big as Lehman as public has run to the bank to withdraw as the fear that the banks have gone broke.
Have got into a habit of looking up the option chain for feel of the trend.
Do you agree with the following:
On the CE side, only 6000 has OI > 70 L, above it the conviction is weak. Meaning if 6000 breaks then it is strong bull on the upside.
But on the PE side, 5800, 5700, 5600, 5500 all have OI > 70L . Writers have conviction at these supports. So, breaking them won't be a one shot thing. Some major international news will be required.
The question then is: Is the Cyprus "legal scam" a news big enough? Some call it as big as Lehman as public has run to the bank to withdraw as the fear that the banks have gone broke.
Right on most counts... 6000 is top for this market factoring positive surprises by RBI. 5800/5700 is a wall of resistance on downside, but it could unwind pretty fast if RBI surprises on negative. For todays trade, i think so called smart money have accumulated 5500-5600 puts as hedge for their long positions... I would suggest to keep an eye on 5700/5800 change in OI.. if it starts to unwind before 11, close out your long positions immediately.. tomorrow is going to be a great learning day for Option Traders
Date: 18.3.2013
Tomorrow is an important day in Options trading.. let us observe if we can make out market movements minutes before RBI policy by looking at Option data... appreciate if you'll write in before that to refine our learnings..
As per OI data, punters are still holding on to a tight range, but FII data suggests shorts being created at lower levels, so if there is positive news by RBI ( >.25 bps cut) short covering should rally upto 5970.. but if not, 5700/5800 should see a sharp cut in OI.. that is when u come out of all longs and enter positional shorts
Happy options trading
Tomorrow is an important day in Options trading.. let us observe if we can make out market movements minutes before RBI policy by looking at Option data... appreciate if you'll write in before that to refine our learnings..
As per OI data, punters are still holding on to a tight range, but FII data suggests shorts being created at lower levels, so if there is positive news by RBI ( >.25 bps cut) short covering should rally upto 5970.. but if not, 5700/5800 should see a sharp cut in OI.. that is when u come out of all longs and enter positional shorts
Happy options trading
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