NIFTY Options Trading by RAJ

[healthraj]

NIFTY
As per COI the Range for today is 7800-7900.
So accordingly SELL near 7900 and Buy near 7800.

BANKNIFTY
It seems to be Rangebound with Pivot at 15850. It seems to be trading below 15850 and so the next Target could 15675 (Average of OI and COI). If 15675 breaks then it could test 15500 (MAX COI at PE) also. More or less Same level as on Tuesday.

MAX COI has changed to 7700-7900. So it has changed from TRENDING to Rangebound. But the Range remains the same 7800-7900.

Overall COI now indicates a BUY.

From Individual strikes point of view
7900 and Above - Bearish - Meaning SELL above 7900.
7850 and Below - Bullish - Meaning BUY below 7850.

So for the moment the Range seems to be 7850-7900.

So for the Range to be 7800-7900, We have to see Bears shorting more 7900 CEs and Bulls should start covering 7800 rather than 7850. right now the Bulls are covering 7850. So Bulls are confident now.

 

[healthraj]

So what does one do in such a case when the Options Chain range is indicating 7800-7900 but stuck at 7850. NIFTY made high 7893. So may be one sold around 7890 levels.

Book 50% around 7850 and wait for 7800.
If you get again at 7900, Sell another 50% and book at 7850 and 7800.

 

[singlap]

So what does one do in such a case when the Options Chain range is indicating 7800-7900 but stuck at 7850. NIFTY made high 7893. So may be one sold around 7890 levels.

Book 50% around 7850 and wait for 7800.
If you get again at 7900, Sell another 50% and book at 7850 and 7800.

But raj, if we see, since COI is in a narrow range (less than 3%), doesn't it means that we can see a directional move in one direction, specially when COI is 7800-7900. Even COI range of 7700-7900 is small.

 

[healthraj]

But raj, if we see, since COI is in a narrow range (less than 3%), doesn't it means that we can see a directional move in one direction, specially when COI is 7800-7900. Even COI range of 7700-7900 is small.

For a stock 2 percent range might be normal. But for an nifty i think more than 100 points should be in normal circumstnaces treated as rangebound. Nifty does not give more than 1.2% on a normal basis.

It also depends on whether you do Futures or Options trading.

If you are doing Futures trading, you anyway have to take a direction or a Bias and so you can trade the Range. So deciding on the whether it will be Rangebound or Trending will be helpful so that you don't miss on the profit or targets.

If you are an Options Trader, you have the option of Buying or Selling options.
With a small Range in COI, you can take the Risk of going for Buying Naked options.
With a Large Range, you have the advantage of Selling the same COI and it would also be safe to trade pairs rathen than trading Naked options.

So for Options Trading today, it is better to SELL the pair 770PE-7900CE Pair which is now available for 122. The bias is still down. But at least you are covered to some extent by selling 7700PE.

 

[XRAY27]

XRAY27 ji,

I have also been following this thread and its great one.

Thanks again for Healthraj.

XRAY ji could you mind sharing your experience about the trading based on the max pain concept

thanks in advace

Please go through my trading system ..LINK is below my signature.. for trade/s
regarding usage of MAX PAIN ........

 

[singlap]

I.Vs have increased in nifty options. May be because of state election results on Sunday.

 

[varesh.et]

NIFTY
As per COI the Range for today is 7800-7900.
So accordingly SELL near 7900 and Buy near 7800.

BANKNIFTY
It seems to be Rangebound with Pivot at 15850. It seems to be trading below 15850 and so the next Target could 15675 (Average of OI and COI). If 15675 breaks then it could test 15500 (MAX COI at PE) also. More or less Same level as on Tuesday.

Hi Raj,

As Bank nifty struggling to pass 15800 with option data 15800+ showing bearishness so is this ideal to short or should still wait to get around 15850 ?

Just to know your views as I am confused at this moment.

 

[Option.Trader]

For positional entries, you have to use only OI.
Buy when the Stock is near MAX OI @ PE. SELL When the stock is near MAX OI @ CE.

If you take NIFTY, this month the MAX OI @ PE is at 7800. And we got 3 opportunities to BUY near 7800.

08-OCT - Made low of 7816 and made high of 7955
10-OCT - Made low of 7796 and made high of 7928
14-OCT - Made low of 7825 and made high of 7900.

Of course in an index you will not get too many chances... But if you look for stocks, where it is trading near the MAX OI levels, you will have a lot of options.

Remember the MAX OI @ PE or CE will not be broken so easily or will not be broken at the first hit. So one can confidently execute this strategy when the MAX OI @ PE or CE is hit the first time.

An additional corollary to this could be, if chgoi at Max OI is > 10% (uncovered) then that support /resistance is not going to hold

 

[healthraj]

Hi Raj,

As Bank nifty struggling to pass 15800 with option data 15800+ showing bearishness so is this ideal to short or should still wait to get around 15850 ?

Just to know your views as I am confused at this moment.

You are not looking at the latest COI . The Pivot has moved to 15750 with COI changing to 15000-16500. So at 15800, I think you can SELL. But a keep a stoploss as per your system. So the new target is 15625

 

[nsbadri]

XRAY 27,
sirjit
thanks