NIFTY Options Trading by RAJ

[Options_Trader]

Rule 4: Does Volume in the Options Chain data play any role in our decision making?.

Yes. Use the Volume data to decide whether it is STRONG BULL or a STRONG BEAR.

Let us say at 6100 we have the MAX CHG in OI @ CE - Say 6L Postions
Let us say at 6000 we have the MAX CHG in OI @ PE - 11L Positions

Now 11L > 6L and PE > CE, so it is a BULL.
Now let us look the Volumes @ 6100CE and 6000PE

Volume @ 6100CE - 5.5L
Volume @ 6000PE - 17

Now compare the CHG in OI and Volume @ 6100CE.
Volume (5.5L) < 6L - So it is not a Strong BULL. Had the Volume been greater than the "CHG in OI" then it would have been a STRONG BULL.

And same logic for the STRONG BEAR also....

Another Observation : So go for Naked Long in CE/PE only when the Volume at the Strike Price > CHG in OI.

What if the Volume does not indicate like above?
Then most probably the market is Range bound.

Reading from the very start. 461 pages of it. .

One query though, is it possible to have change in OI greater than volume? In my view it is not possible. Your volume should be greater than change in OI. Am I missing something?.

 

[Options_Trader]

is calender spread a static strategy???

Wat is a static strategy?

 

[toughard]

Wat is a static strategy?

its just opposite to dynamic option structure like calender spread or opposite to option legging....
here only the time is needed NOT timing:thumb:

 

[Options_Trader]

its just opposite to dynamic option structure like calender spread or opposite to option legging....
here only the time is needed NOT timing:thumb:

Like butterfly, bull spread etc with predefined risk reward.
Thanks for pointing that out.

 

[healthraj]

Reading from the very start. 461 pages of it. .

One query though, is it possible to have change in OI greater than volume? In my view it is not possible. Your volume should be greater than change in OI. Am I missing something?.

Yes there was some problem with my assumption. The Volume is expressed in Lots and OI in Quantities. So to make it uniform you have to multiply the Volume with the Lots (which I was not aware while writing the Rule)

 

[komalagarwal]

Raj sir,please accept my heartily thanks as my first real trade was successful today because of you.

 

[toughard]

Yes there was some problem with my assumption. The Volume is expressed in Lots and OI in Quantities. So to make it uniform you have to multiply the Volume with the Lots (which I was not aware while writing the Rule)

Raj can I consider that the risk reversal trading that you been exhibiting is done with even number of lots bcz kindly see

http://www.traderji.com/trading-diary/88670-nifty-options-trading-raj-460.html#post962118

thanks

 

[Options_Trader]

Overall CHG in OI

CE @ -9.2 L
PE @ 19.15L.

If the CE volume does not Go Down, then it would be a concern for our Short positions. Because Too much Negative Values means the BEARs are letting the market GO UP.

CHG in OI @ 6100-6200

MAX OI @ 5900-6200

Still Favouring Bulls - No signs of Short Yet

Very nice thread.

When you base your decisions on option chain, you believe the option writers are stronger and better players. If you look at the file Participant wise open interest at http://nseindia.com/products/content/derivatives/equities/homepage_fo.htm
you will find the net buyers of both index calls and puts are generally FIIs. Buying index puts gives the FIIs protection. So by writing puts we may not be going against FIIs. Can you clarify? I am still trying to get a sense of option chain.

 

[Options_Trader]

Very nice thread.

When you base your decisions on option chain, you believe the option writers are stronger and better players. If you look at the file Participant wise open interest at http://nseindia.com/products/content/derivatives/equities/homepage_fo.htm
you will find the net buyers of both index calls and puts are generally FIIs. Buying index puts gives the FIIs protection. So by writing puts we may not be going against FIIs. Can you clarify? I am still trying to get a sense of option chain.

Can we understand it like this:

Since buying options require less money,low risk, and a better ROI, a greater number of people prefer buying options. Here come more informed and stronger players who write options. And we follow them. Who are the option writers in Indian market. In your earlier post you mentioned that market makers sell options. Appreciate if you can help.

 

[toughard]

Can we understand it like this:

Since buying options require less money,low risk, and a better ROI, a greater number of people prefer buying options. Here come more informed and stronger players who write options. And we follow them. Who are the option writers in Indian market. In your earlier post you mentioned that market makers sell options. Appreciate if you can help.

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