NIFTY Options Trading by RAJ

[mohan.sic]

Change of OI is influenced by many ways
a) New seller creates a postion with a new buyer (OI added)
b) Existing buyer squares of with existing seller (OI decreases)
c) Existing buyer squares of with new seller (no change)
d) Existing seller squares of with existing buyer (OI decreases)
e) Existing seller squares of with new buyer (no change)

So a new position is created only when a new seller comes in.
There is a good example in one of blogs



Option trader,

The example posted by you is about OI. Its showing how OI changes.

Rule no.4 is not about volume and OI . Its Volume and Change in OI.

I don't see any way how change in current day OI can be greater than current day volume.

pls comment.

thanks.

 

[bapu4]

Understanding VIX

Since the Options Trading is influenced by VIX, I want to understand what is the Implication of VIX going down.

Anybody who knows the answer.

When I was googling I found that INDIAVIX is calculated using the NIFTY OTM Options Bid and Ask Prices. So it is like Chicken and Egg problem. We use VIX to trade options. But VIX is calculate using Options Price.

So VIX is direct mapping of what is happening in Options?

So what is very clear is if VIX goes down the Options Prices go down?

My questions are
1. Why Should VIX go down suddenly? What is happening in Ask Bid Price pattern which will drive this VIX to go down?
2. Since the VIX is a function of OTM Options which are held mostly by Operators, they can anytime bring the VIX down or UP. So what is that we should look for in OTM options?
3. What is the pattern in Ask bid price we have to see to find out if VIX can go UP again?
4. Does VIX indicate the Range of the market?

The only answer I can think of from a Layman perspective is that The VIX will go down when there is a HUGE SELL Of the Options Price and the Prices drop suddenly. Why would they sell the options ? To consolidate the market or to Reverse the positions

In today's case does it indicate a REVERSAL to 5700 or a Consolidation to goto 6400 ?

The VIX of 21% indicates that in the next 30 days the market can MOVE UP or DOWN 6%. 21/SQRT(12).


At the EOD, if you look at the Bid-Ask Quantity in Put side it is no way comparable to the CE side. So I think there is Heavy Buying of Puts and the Market I think will go down heavily. Are we going to see 4900 in this expiry because the Largest bidding is in 4850, 4950 and 5050

http://vix.co.in/indiavix/how-india-vix-is-calculated/

Dear Raj ,
EUREKA !! Can we say ?? Yes i am very hopefull that this can be the holistic core of the game !!

Raj bro, this is one of the best analysis that i have seen on the forum !! I am a regular visitor, reader and learner of your teachings !! U guys are nothing less than angels !! And today this post gave us a completely different perspective of viewing the game !!

I want to ask u that :
(1) From where can we get the BID ASK picture .Should we watch it during the market hours or EOD ?
(2) By 30 days i think u mean, end of OCT series and since u have divided volatility by sqrt of 12 i.e. the remaining time ! Am i correct ?

GOD shower his choicest blessings on u !!

Rgds.
:thumb:

 

[simpletrader2012]

hi option Trader
The calculations given are wrong.
Let us make one point clear that regardless of OI or COI volume will never come down in calculations. Each and every trade contributes to volume.
About OI Make it simpler

One New Buyer and One New Seller = OI increases by 1
Both Traders are closing and existing position= OI decreases by 1
Ole Buyer with new seller/ Old Seller with new Buyer= No Change in OI as one passes the trade to another.
This is the formula.pls correct me if i have gone wrong somewhere.

 

[bapu4]

Jus contributing a bit from my side !! Though i know nothing in comparison to u all !! So please bear with me !! Correct me if i am wrong !!
Gustakhi Maaf Ho Sarkaar !!

As far as i know ,
1) OI is the total number of quantity still outstanding. This is the quantity that have not been exercised, closed, or expired. The higher the open interest, the easier it will be to buy or sell the stock option because it means a great deal of traders are trading this stock option.

2)Volume depicts, no. of stock option contracts traded throughout the day.

In the NSE option chain data, the OI and change in OI is the quantity of stocks.
And the volume given in it is the no. of contracts traded !!

This can also be judged by observing the figures . If we see, the OI and COI are in multiples of 50 but the volumes are not in multiples of 50 ,that shows that volumes data shown in the chain are no. of contracts !!

GOD bless u !!
Rgds !!

 

[Option.Trader]

Option trader,



I don't see any way how change in current day OI can be greater than current day volume.

pls comment.

thanks.

Are you taking about OI or CHGOI? OI can be greater than volume, but CHGOI will not be greater than volume of day in terms of contacts

 

[healthraj]

Dear Raj ,
EUREKA !! Can we say ?? Yes i am very hopefull that this can be the holistic core of the game !!

Raj bro, this is one of the best analysis that i have seen on the forum !! I am a regular visitor, reader and learner of your teachings !! U guys are nothing less than angels !! And today this post gave us a completely different perspective of viewing the game !!

I want to ask u that :
(1) From where can we get the BID ASK picture .Should we watch it during the market hours or EOD ?
(2) By 30 days i think u mean, end of OCT series and since u have divided volatility by sqrt of 12 i.e. the remaining time ! Am i correct ?

GOD shower his choicest blessings on u !!

Rgds.
:thumb:

Don't be Euphoric and put all your money. Just invest your throw away money like 1500/3000 where you can buy 1000/2000 quantities. So if market does not goto 5200, you don't have to Regret later. So please do not put more than 2% of your capital in this gamble.

You can see the summary view on where the max ask/bin in the OptionsChain Table. For the individual contracts you should get it in your trading terminal.

 

[bapu4]

Hi Raj,
Don't worry I won't.Your findings need to be verified few times then we can say with confirmation,but my gut feeling says we are around it!!

god bless you

 

[mohan.sic]

Are you taking about OI or CHGOI? OI can be greater than volume, but CHGOI will not be greater than volume of day in terms of contacts

I am talking about Rule no 4. which is about change in OI. Not OI.

And Even OI cant be more than Volume. In your previous example it showed
how Total OI changed on daily basis with Daily Volume. It compared Total OI to current day volume. where as our point is Intraday volumes, comparing current day's changes in volumes to Current days OI or change in OI.

Please correct me if I am wrong.

 

[Option.Trader]

I am talking about Rule no 4. which is about change in OI. Not OI.

And Even OI cant be more than Volume. In your previous example it showed
how Total OI changed on daily basis with Daily Volume. It compared Total OI to current day volume. where as our point is Intraday volumes, comparing current day's changes in volumes to Current days OI or change in OI.

Please correct me if I am wrong.

OI shown in NSE website is a cumulative.. so it will be always greater than volume shown..

 

[Option.Trader]

Did the max pain change from 6000 to lower value in yesterday trade?