Dear Raj ,
Many a times i have seen that instead of obeying the OI and COI, the price obeys the IV !! Suppose the OI is indicating downside and IV of CE is less than PE, then the price goes up instead of going down !!
So, how should we judge the movement !!
Also ,please guide, how to interpret the volatility curve,intraday and positional pivots' curves given in the OAT !!
For eg. i am posting the OAT result for ARVIND !! where would the movement take place ??
God Bless U !!
Rgds !!
I think there are too many questions. So I will answer the question on IV.
Normally in a Real Good BULL market the IV for the Calls will be more than the Puts. Because traders do not mind putting more premiums for the Calls and so the IV also goes UP. But in a Trader's market, where we are in now, The retail participation is low and so the money is made by Selling options rather than by buying options.
So there are different types of markets where you have to apply different techniques. I always suggest a simple technique for those who want to Trade the pairs.
When you see the market in UP Trend (Look at 60 minute chart of Daily chart to find the current trend), Go for Credit Spreads (Selling Pairs). In the DOWN Trend market GO for Debit Spreads (Buy Pairs).
The Reason for the above strategy is that irrespective of whether the market is Real BULL or Trader's BULL, the IV in relative terms goes down when the market goes UP and the IV goes UP when the market goes down. Increase in IV helps Debit Spreads and Decrease in IV helps Credit spreads.
Right now we are in Trader's market. It is not a REAL Bull market....
AS I I have explained before, in a REAL BULL market if you see the VOLT trend chart, you will see a Tick mark pattern. And in the Real BEAR market you will see the Reverse of a Tick Mark Pattern. In a FLAT market, you will see a SMILE pattern.
The Reason it is not a REAL Bull market is from a Retail Trader perspective, Excepting the IT stocks all other stocks trading near the lows but still NIFTY index is trading near the Life time Highs. It is still my opinion as to call it "NOT A REAL BULL MARKET". I would leave the debate for others.