NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
First of all When I take the OI/COI I always take the values as a SELL and Not as a BUY. So this the first assumption. Because I assume Options are secondary instruments and used by BEARS or BULLs for Hedging their positions.
So let us Take BULLs. If BULLs want to Take the Market UP, then they would be selling Puts. And the BEARS if they want to take the market Down, they would be SELLing Calls. I am not taking option where BULLs could Buy Calls and BEARS could Buy Puts.
So with the Above assumption, today NIFTY is trading near 7600.
So BULLs if they want to Take the market UP, they would be SELLing 7600, 7500, 7400,... PUTs
BEARS if they want to take the market DOWN would be selling 7600, 7700, 7800,.... Calls.
Today as per the COI, The Puts are 27.25 L and Calls are 1.84L. So the Puts is more than Calls and so it is Bullish.
Now we can go Step further and Look at Calls and Puts above and below 7600.
Positive Call Positions below 7600 indicates - Long Build - Bullish
Negative Call Positions (square OFF) below 7600 indicates - Long Unwind - Bearish
Positive Call Positions Above 7600 indicates - Short Build - Bearish
Negative Call Positions (square OFF) Above 7600 indicates - Short Unwind - Bullish
Positive Put Positions below 7600 indicates - Long Build UP - Bullish
Negative Put Positions (square OFF) below 7600 indicates - Long Unwind - Bearish
Positive Put Positions Above 7600 indicates - Short Build - Bearish
Negative Put Positions (square OFF) below 7600 indicates - Short Unwind - Bullish
IF NIFTY is at 7600, normally I consider three strikes above and 3 strikes below. So I consider 7300, 7400, 7500, 7600, 7700, 7800, 7900.
So accordingly.
CALLs below 7600 : -3.5L - Negative - Long Unwind - Bearish
CALLs Above 7600 : 8.8L - Positive - Short Build - Bearish
Puts Below 7600 : 13.5L - Positive - Long Build - Bullish
Puts Above 7600 : 3.3L - Positive - Short Build - Bearish.
So you can see 3 quadrants bearish and 1 quadrant bullish. But the 1 quadrant has more positions than the rest of the three. So ultimately it was positive / bullish or Weak bull today.
If you don't consider those quadrants and take only the Total Calls Vs Total Puts then it is 3.5L Vs 27L. So it is still Bullish.
To cut the Story short, If number of Calls is greater than number of Puts, it is Bearish and Vice versa
So the problem (No clear direction) comes when there is negative value or squaring off happens. Squaring off can mean two things - Profit taking and continue with the trend - Or profit taking and a Reversal.
Yesterday and today is Profit taking in Calls... Yesterday around 30L of Calls squared and today around 10L calls squared off... Now is it a continuation of the Trend or a Reversal - We have to wait and watch.
So let us Take BULLs. If BULLs want to Take the Market UP, then they would be selling Puts. And the BEARS if they want to take the market Down, they would be SELLing Calls. I am not taking option where BULLs could Buy Calls and BEARS could Buy Puts.
So with the Above assumption, today NIFTY is trading near 7600.
So BULLs if they want to Take the market UP, they would be SELLing 7600, 7500, 7400,... PUTs
BEARS if they want to take the market DOWN would be selling 7600, 7700, 7800,.... Calls.
Today as per the COI, The Puts are 27.25 L and Calls are 1.84L. So the Puts is more than Calls and so it is Bullish.
Now we can go Step further and Look at Calls and Puts above and below 7600.
Positive Call Positions below 7600 indicates - Long Build - Bullish
Negative Call Positions (square OFF) below 7600 indicates - Long Unwind - Bearish
Positive Call Positions Above 7600 indicates - Short Build - Bearish
Negative Call Positions (square OFF) Above 7600 indicates - Short Unwind - Bullish
Positive Put Positions below 7600 indicates - Long Build UP - Bullish
Negative Put Positions (square OFF) below 7600 indicates - Long Unwind - Bearish
Positive Put Positions Above 7600 indicates - Short Build - Bearish
Negative Put Positions (square OFF) below 7600 indicates - Short Unwind - Bullish
IF NIFTY is at 7600, normally I consider three strikes above and 3 strikes below. So I consider 7300, 7400, 7500, 7600, 7700, 7800, 7900.
So accordingly.
CALLs below 7600 : -3.5L - Negative - Long Unwind - Bearish
CALLs Above 7600 : 8.8L - Positive - Short Build - Bearish
Puts Below 7600 : 13.5L - Positive - Long Build - Bullish
Puts Above 7600 : 3.3L - Positive - Short Build - Bearish.
So you can see 3 quadrants bearish and 1 quadrant bullish. But the 1 quadrant has more positions than the rest of the three. So ultimately it was positive / bullish or Weak bull today.
If you don't consider those quadrants and take only the Total Calls Vs Total Puts then it is 3.5L Vs 27L. So it is still Bullish.
To cut the Story short, If number of Calls is greater than number of Puts, it is Bearish and Vice versa
So the problem (No clear direction) comes when there is negative value or squaring off happens. Squaring off can mean two things - Profit taking and continue with the trend - Or profit taking and a Reversal.
Yesterday and today is Profit taking in Calls... Yesterday around 30L of Calls squared and today around 10L calls squared off... Now is it a continuation of the Trend or a Reversal - We have to wait and watch.
Hi Thank you toughard.
The only Difference between this method of finding Bullish or Bearish is
- In the method above Price and COI is considered.
I don't consider the price mainly because the increase or decrease in Price can be due to Volatility and so I consider only Change in Open Interest.
The other thing is that in the above for the same strike We have one view from Call and another view from Put. That means the view is taken only for that strike and for that Call or Put and so it is not taken in comparison to call or put. This is the traditional view which is described in lot Option books. So I am not saying whether it is right or wrong. I am just pointing out the difference.
At the end of the day, one should be able to take a bias such as Bullish, Bearish or FLAT and go for a strategy
The only Difference between this method of finding Bullish or Bearish is
- In the method above Price and COI is considered.
I don't consider the price mainly because the increase or decrease in Price can be due to Volatility and so I consider only Change in Open Interest.
The other thing is that in the above for the same strike We have one view from Call and another view from Put. That means the view is taken only for that strike and for that Call or Put and so it is not taken in comparison to call or put. This is the traditional view which is described in lot Option books. So I am not saying whether it is right or wrong. I am just pointing out the difference.
At the end of the day, one should be able to take a bias such as Bullish, Bearish or FLAT and go for a strategy
MAX COI at 7100-7600 and MAX OI @ 7500-8000.
As per LTF the support was at 7603 and NIFTY has bounced back from there. The minor Trend Resistance is at 7635.
In the HTF also the minor Trend Support is at 7603. If 7603 holds today we might see 7700. If 7600 breaks then we might see 7521, 7430 and 7339.
So 7600 Level is very important for today
As per LTF the support was at 7603 and NIFTY has bounced back from there. The minor Trend Resistance is at 7635.
In the HTF also the minor Trend Support is at 7603. If 7603 holds today we might see 7700. If 7600 breaks then we might see 7521, 7430 and 7339.
So 7600 Level is very important for today
7600 Did hold today and the Minor Trend Resistance and 7635 broken and made 70 points from 7600. SELL triggered at 7670 in LTF.
In the HTF, 7672 is the Pivot of the Minor Trend. So it might act as the Resistance. I think from here there might be a SELL. NIFTY can still make 7700 also. But from here I think it is a SELL on Highs.
MAX COI @ 7600-8000 now from 7100-7600
In the hourly charts the Minor Trend support has moved from 7600 to 7620. So if 7620 Breaks today then we can expect a SELL Off otherwise today might a Bullish day
In the HTF, 7672 is the Pivot of the Minor Trend. So it might act as the Resistance. I think from here there might be a SELL. NIFTY can still make 7700 also. But from here I think it is a SELL on Highs.
MAX COI @ 7600-8000 now from 7100-7600
In the hourly charts the Minor Trend support has moved from 7600 to 7620. So if 7620 Breaks today then we can expect a SELL Off otherwise today might a Bullish day
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