NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
Re: Compilation of important posts here
Thanks Sidz for this post
Thanks Sidz for this post
Here are the list of all the posts by Raj at one place. For those who are too lazy to go through the whole thread. :thumb: Enjoy money making and thank Raj for this knowledge bank.. 
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OK. It is my own logic. It need not be 100% Fool proof.
When Market was trading around 5930, I always take the 5 strikes for my calculation. So it would be ATM strike, 2 ITM strikes and 2 OTM strikes.
So it was 5700, 5800, 5900, 6000 and 6100.
For Each strike, I find what is the Trend, It could be either BULL, BEAR or FLAT.
I calculate the overall Trend using the Overall "CHG in OI:. Here the "Overall" means only my 5 strikes. So i don't consider what is happening below 5700 or above 6100.
The Trend came as "Bear". Then I count the number of "Bear". If it is more than 2 then I take it as a Strong Bear.
So today closing had
5700 - Bull
5800 - Bull
5900 - Bear
6000 - Bear
6100 - Bear
At the time I wrote as "Weak Bear", 5900 was indicating as "Bull" and you saw the market coming UP from 5908 to 5960...
That is when I asked to close the positions at 5945 and the market finally closed at 5927.
Today the CHG in OI at CE being added above 5900 (in 6000, 6100) was 19L.
Today the CHG in OI at PE being added Below 5900 (in 5700, 5800) was 16L.
The Overall CHG in OI at CE was 24L
The Overall CHG in OI at PE was 15L
MAX at the individual Strike level,
11.77L added at 6000CE
8.63L added at 5800PE
So base is being built at 5800PE, which would be anyway Tested.
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Please use the MAX Pain only for taking positional Trades or during Expiry.
For Positional trades if the current NIFTY value is away from MAX Pain by around 4%-5% (240-300 points in NIFTY), then take a Trade which will lead you to the MAX Pain. The Expiry strategy we covered in the last 4 days.
Otherwise do not give much importance to MAX Pain. The Series is just now starting.
There was may be one more observation which people can use to take positions at the end of the Expiry.
At the end of the AUG-13 expiry, the AUG-13 MAX Pain was at 5400 but the SEP-13 MAX Pain was at 5500. Which indicates that the SEP-13 will go up. So somebody could have taken a BUY call.
Similarly At the end of the SEP-13 Expiry the MAX Pain of SEP-13 was at 5850-5900 but the OCT-13 MAX Pain was at 5800. So somebody can start the Series with a SELL call.
I don't know if it works always. It is just my observation. So people need to observe and build their own system based on the OptionsChain data.
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Those who Trading with the Options, and looking for A direction, Also please look at the cell M46. This is calculated based on the traditional wisdom of reading the Options Chain.
That is
When the CE NET CHG +ve and the COI +Ve - Bullish - Long Build
When the CE NET CHG +ve and the COI -Ve - Bullish - Short unwinding
When the PE NET CHG +ve and the COI +Ve - Bearish - Long build
When the CE NET CHG +ve and the COI -Ve - Bullish - Long unwinding
So accordingly the Market is now become FLAT
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Why November we can buy OCT-13 Series put itself, which would be cheaper? NOV-13 might be costly given the current volatility? Plus it is better to wait till Friday to take the Short positions because normally the NIFTY Range which is 500 points for this series is only 400. INFY might change the Range from 5700-6100 to 5700-6200. So let us wait till Friday to take Short positions. Now the Trend is UP, So let us not think about DOWNside now.
One more important point is that we should always Trade at least 150-200 points away from MAX Pain so that we can be sure. Let us suppose if 5700-6200 becomes the Range then MAX Pain would become 5950 (Average of 5700 and 6200). So we should Take our positions at least around 6100
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Rule 1 to 6 are more general Rules. Now comes the most important Rule. With all these Rules we have to now take a position. The possible options we have are
Naked Options
Debit Spreads
Credit Spreads
I will put down my experience on the above. So use these more as an observation and not as a Rule because I am still learning.
For Naked Options and Debit Spreads we want the VOLT to increase or Stay ASIS but we definitely don't want the VOLT to come down which will hurt our positions. From My experience the VOLT increases when the Market goes down and the VOLT Decreases when the Market goes UP. VOLT is also a function of INDIAVIX. So you can use VIX and VOLT interchangeably.
So General Rule would be
- Go for Debit Spreads when you feel that the market is on DOWN TREND
- Go for Credit Spreads when you feel that the Market is on an UP TREND
So the basic assumption is on the VOLT. Now in a REAL BULLISH market, VOLT can Go UP also. Now somebody can say that Market has moved from 5100 to 6100. Will you not call it a BULL market. The answer from my point of view is NO, it is not a BULLISH market.
After all these rules, We have to finally Take a call on where the market will Go. UP or DOWN. The second thing is we also need to have an idea on Where the VOLT will go, UP or DOWN. So a combination of Market Trend and VOLT should help take the Debit Spread or Credit Spread.
VOLT UP + MARKET UP = Debit Spread = REAL BULLISH Market
VOLT UP + MARKET DOWN = Debit Spread = REAL BEARISH Market
VOLT DOWN + MARKET UP = Credit Spread = REVERSAL
VOLT DOWN + MARKET DOWN = Credit Spread = REVERSAL
So you can see that finally it is a GAME OF VOLT and we end UP predicting the VOLT
JULY-13 - Market was going UP - VOLT was flat and so Credit Spreads were profitbale
AUG-13 - Market was going DOWN - VOLT was going UP - Debit Spreads would have been profitable
SEP-13 - Market was going UP - VOLT was going DOWN - Credit Spreads would have been more profitable
OCT-13 - So far Market is going UP - VOLT is coming down - Credit spreads would have been profitable.
One more important data you have to observe is that the INDIAVIX normally is in the Range of 20-25 for the majority of the time and where all our General Rules would be successful.
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My view on how to Set the FULL Target for a Trade and Stoploss
This is just for a discussion and debate and based on my observation. So please pass your comments accordingly.
I always notice and Read that the tips providers and the experts always provide a Target of 1% for an entry and stoploss say 20% or 40%
Why not the Target be 1.2% from the Low? Those who follow my thread will notice that I always look for say 60+ points in NIFTY. If you look at the OAT you will notice that it is 1.2%.
So where is this extra .2% or 20 basis points coming from?
Can we also use the 1.2% for other stocks?
My view is that the extra 20 basis point is basically the VOLT in FOVOLT. For NIFTY the VOLT is around 20%. so you can always set the Target for the extra 20 basis points.
Today If you look at the MCDOWELL-N, it made High of NOT 2% but 2.8%. Because the for Every 1% rise the VOLT of MCD is .44 or 44 basis points and so MCD made 2.88%.
So next time when you set the Target look at the FOVOLT and Set your Target accordingly. Why to loose the 20 or 80 basis points?
In the new version of OAT, I also use the VOLT to get my BUY / SELL signal. The VOLT would be normally used to make that extra spike and cheat the Retail traders and to make them hit the stoploss and so if keep the Stoploss as 20% for every stock, you are more likely to hit the Stoploss. So if your stoploss 20% then set it as 20% of 1.22% of NIFTY of 20% of 1.44% of MCDOWELL-N.
Try this for other stocks and Let me know If I make any sense.
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Hi,
I think I had already explained the logic when I posted the new chart for the first time. Let me explain it again.
Let me take a simple Example.
Let us take 2 Major Pivot Lows, 5973 and 5986
Two Major Pivot Highs 6212 and 6173.
Now the Trend is basically the Average of the above which is 6086. So for now 6086 would be your Trend line or Pivot line. In the Excel there is a Function called TREND to calculate the Trend of a given Set of numbers, which would give you a Straight line.
After finding out the Trend, Calculate the Standard Deviation or Standard Error from the Trend and the four points
6086- 5973 = 113
6086- 5986 = 100
6212 - 6086 = 126
6173 - 6086 = 87
Now calculate the Average of 113, 100, 126, 87. You get 106.
Now Plot a Line of RESISTANCE at 6086 + (106 * 1.20) = 6213
Plot of Line of Support at 6086 - (106 * 1.20) = 5959
Where 1.2 = 1 + FOVOLT of the Stock. For NIFTY the VOLT is around 20% and so I am adding 20% more.
Now If you get above 6213 you can SELL and if you get below 5959 you Can Buy.
I have explained with just four pivots. If you do the same calculation with say 40 Pivots, Your Trend would be little more accurate.
If you notice this is what most the oscillators or the RSI indicators will do. They will Tell you if a stock is oversold or overbought.
One of the most important thing is that I have customized using the FOVOLT of the Stock. So that we capture VOLT and we get a little bit accurate signal
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This is a Excel function that I had written in my OAT Tool to fetch the FOVOLT file from NSEindia.com site.
See if you are able to understand
This will download the file for example the 14-FEB-2014 FOVOLT data
http://www.nseindia.com/archives/nsc...T_14022014.csv to the sheet FOVOLT in my OAT tool.
If you have a .CSV file you can apply the same logic to download any .CSV from anywhere in the net to any excel sheet
'****************************************************************************
'**************************** FUNCTION TO GET THE NSE FUTURES VOLATILITY DATA
'****************************************************************************
Public Sub GetVolatilityDataFromNSEIndia()
Dim ws As Worksheet, strFile As String
Dim EndDate As Date
Dim wd As Long
Dim myQueryTable As QueryTable
On Error Resume Next
Dim qTable As QueryTable
For Each qTable In RAJMTP.Worksheets("FOVOLT").QueryTables
qTable.ResultRange.ClearContents
qTable.Delete
Next qTable
Set ws = RAJMTP.Worksheets("FOVOLT")
If (TimeSerial(Hour(Now), Minute(Now), Second(Now)) > TimeSerial(Hour(TimeValue("4:00:00 PM")), Minute(TimeValue("4:00:00 PM")), Second(TimeValue("4:00:00 PM")))) Then
EndDate = DateSerial(Year(Now), Month(Now), Day(Now))
Else
EndDate = DateSerial(Year(Now), Month(Now), Day(Now) - 1)
End If
wd = Weekday(EndDate)
If (wd = 7) Then
EndDate = DateSerial(Year(EndDate), Month(EndDate), Day(EndDate) - 1)
ElseIf (wd = 1) Then
EndDate = DateSerial(Year(EndDate), Month(EndDate), Day(EndDate) - 2)
End If
strFile = "http://www.nseindia.com/archives/nsccl/volt/FOVOLT_" & Format(EndDate, "ddmmYYYY") & ".csv"
Set myQueryTable = ws.QueryTables.Add(Connection:="TEXT;" & strFile, Destination:=ws.Range("A3"))
With myQueryTable
.Name = "FOVOLT"
.FieldNames = True
.RowNumbers = False
.RefreshStyle = xlOverwriteCells
.SavePassword = False
.SaveData = False
.AdjustColumnWidth = False
.RefreshPeriod = 0
.WebSelectionType = xlEntirePage
.WebFormatting = xlWebFormattingNone
.WebPreFormattedTextToColumns = True
.WebConsecutiveDelimitersAsOne = True
.WebSingleBlockTextImport = False
.WebDisableDateRecognition = False
.WebDisableRedirections = False
.TextFileParseType = xlDelimited
.TextFileCommaDelimiter = True
End With
myQueryTable.Refresh BackgroundQuery:=False
For Each qTable In RAJMTP.Worksheets("FOVOLT").QueryTables
qTable.Delete
Next qTable
End Sub
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Never buy a OTM Call or the Strike where there is Resistance or Support because those are candidates for SELLING.
For example if as per the Hourly chart if the Support is at 7250 and Resistance at 7395 and if the Bias is UP side, Then the strategy might be
SELL 7200PE/7250PE-7400CE/7450CE
Buy 7300CE / 7350CE
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First of all i never said the June would clse between 7250 and 7400. The levels were looking at the Hourly chart.
1. For Selling in NIFTY I have some magic Premium numbers. Otherwise I don't sell. The magic number is around 120.
When we sell at 120, normally the Reversal will happen around 90 (30 points), If there is no reversal then the next target would be 60 (another 30 points from 90).
So sometimes when you don't get a pair for 120 in the second or thid week, Look for a pair with a premium of 90 points... But you have to keep watching the pair.
I will sell only when the combine premium of the Call and the Put is around 120. IF ALL is WELL, it will surely give 30 points.
For example today the MAX COI was in 6800PE-7300CE and the Combined premium is 126. So it is a candidate for Selling.
2. And the other point is the difference between the strikes should be around 500 points. Last week I sold 7000-7500 and the difference is around 500.
The difference between 6800 and 7300 is once again 500 points.
3. The Last point is when the MAX OI pair is not at 120 or 90. Find a COI pair so that the combined premium is around 120...
Some simple number crunching to show the profits one can get in SELLING and those who believe that Selling options will not give a HUGE Profit.
There are 4 weeks in the Expiry.
The combines premiums starts at 120 and roughly there are 20 trading days. Since we are selling we are looking for some 120/20 = 6 points to erode every day. And Ideally if you have chosen the right pair in the beginning of the month, you should get the Full 120 points.
At the end of the first week, the 30 points would be lost and 120 will become 90
At the end of the second week another 30 points would be lost and 90 will become 60.
In the third week 60 will become 30
And on the dayy of expiry 30 will become 0.
So Ideally if somebody has a Capital of 1 Lakh then they can SELL 200 quanities and ideally they can get a profit of around 200 * 120 = 24000 in a month. Even if one gets 10000 then it is a huge profit. On top of this if one can intelligently combine it with a Long Put or Call then they can make more profit.
I have been observing the Premiums and this is how it happens.... You can take a pair and watch the Premiums before you believe
For example take the Pair 6800-7300 and See the Pair's value on 26-Jun-14.
So how do we find the pair for Stocks.
For NIFTY it works like these and it should work in a similar fashion for Stocks also.
For NIFTY since you need minimum two strikes to SELL the Difference would be 100 points. Add 20% (NIFTY Historic Volatility). that would be 120 points. So ideally on Week 1 of Expiry you should be able to find a Pair with a Premium of around 120.
Let us take SBIN.
SBIN Strike is 20 points. And the HIST VOLT is now at 60%.
So we would need to find a pair whose value would be 20+20=40 + 60% * 40 = 40 + 24 = 64.
The MAX OI is at 2500-2700 with a combined premium of 120. But we would need only 64 points. So we can choose outside 2500-2700. Say 2260-2760 with a comined premium of 68.
So everyday you should get around 3.2 points.
By the end of First week 64 should become 64-16 = 48
Second week 48 should become 32 and so on ...
Please observe and take your own decision to trade... I might be wrong... But these are some of my observations and Tips to Enter the SELL positions for PAIR trading.
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Sorry dear friend. I have been told my many people in this forum that, that would be a foolish act from my side to share my trading system. This tool is based on my five years of hardwork and observation and fine tuning. Even though I have not shared my last version, which is basically giving the levels, I have pretty much shared everything else in the forum. So the last version is for myself. Plus I have not modified my tool for the last 6 months.
But I can tell you there is no Rocket science in my tool or Logic.
I have explained the logic many a times. I will explain it once again for you.
1. For a given set of last 80 candlestick Closing values, Calculate the Trend (I use the excel function called TREND).
2. Then Calculate the standard deviation of these 80 points (I use the excel function STEYX) - You will get a Value XX
3. To the TREND Lines you got from 1, Add the value XX, You should a Get your Trend RESISTANCE.
4. To the TREND Lines you got from 1, Subtract the value XX, You should a Get your Trend SUPPORT.
5. You can add a bit of customization by using the VOLT on top of the RESISTANCE / SUPPORT.
6. I normally calculate two Supports (S1 and S2) and Two Resistances (R1 and R2). Two times XX should give you R2 or S2.
7. To get the MINOR Trend, Repeat the above Steps 1 to 5 using last 30 candlesticks instead of last 80 candlesticks.
In the last 3 months starting from 13-Mar, From the Day I decided to go SLOW, I have been trying only one or two strategies and it works for me. But it will not make me SUPER Rich in a Year. But it has consistently given more than 20% in month. I only Trade options and I mostly SELL options (and sometimes combine with a BUY when I feel there is a Strong direction like Yesterday from 7450/70.). Sometimes I hold my position for a Week just to get 20/25 points.
As long you don't experiment and develop your own system, my opinion is any great system would not be useful for somebody. So please try and develop a system which would suit your trading method.
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This is comparing the COI in each strike and finding the trend...
7600PE has 126K 7600CE has 458K
7500PE has -31K 7500CE has 80K
7400PE has -2K 7400CE has 156K
7300PE has 848K 7300CE has 2K
Now to calculate Direction, At 7500
The positions is 7500CE+7600CE is greater than 7500PE + 7400PE. So at 7500 more positions in Call and so it is bearish... Same is the case for 7600, 7700, etc...
At 7400, the positions in 7500CE+7400CE is less than the 7400PE+7300PE. So there is more Puts being sold on the lower side like 7300PE has 848K and 7600CE has 458K positions. So it would be bullish from 7400 perspective...
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In the Hourly charts, NIFTY is trading above R1 but the Minor Trend is Bullish because it was a Good UP move..
So the Put Strikes below 7600 are indicating Bullish 17L Puts Sold below 7600... OR it could be BUY also...
Puts above 7600 are 2.8L - Bearish
Calls below is -2.1 L - Calls getting squared off is Bearish
Calls above 7600 9.3L - Short Build so it is Bearish.
So it is 17L versus 2.8L + (-2.1L) + 9.3L - Still it is Bullish....
From a Overall COI, it is 35L Puts Versus 4.1L Calls - Bullish.
So overall it is Bearish. But since NIFTY was trending UP and not Rangebound, we need to be careful about the move.
So my view is as follows...
IF NIFTY makes a Sharp move below 7610, then we can go SHORT, otherwise it is better to remain Long till 7700.
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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
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If you want to go for Pair Trading SELL the MAX OI pair.
If you want to Go for Naked Options Buying, Buy the Strike where the MAX OI is present.
For example for the NOV-14 Series, the MAX OI is at 8000-8200. So ideally NIFTY should test 8200. Yesterday it was at 7700-8200. Today moving to 8000-8200 is a bullish signal.
When NIFTY is around 8200,
If you want to do Pair trading, you can sell the Pair 8000PE-8200CE.
Or if you want to do Naked Options Trading, you can buy 8200PE.
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OK. It is my own logic. It need not be 100% Fool proof.
When Market was trading around 5930, I always take the 5 strikes for my calculation. So it would be ATM strike, 2 ITM strikes and 2 OTM strikes.
So it was 5700, 5800, 5900, 6000 and 6100.
For Each strike, I find what is the Trend, It could be either BULL, BEAR or FLAT.
I calculate the overall Trend using the Overall "CHG in OI:. Here the "Overall" means only my 5 strikes. So i don't consider what is happening below 5700 or above 6100.
The Trend came as "Bear". Then I count the number of "Bear". If it is more than 2 then I take it as a Strong Bear.
So today closing had
5700 - Bull
5800 - Bull
5900 - Bear
6000 - Bear
6100 - Bear
At the time I wrote as "Weak Bear", 5900 was indicating as "Bull" and you saw the market coming UP from 5908 to 5960...
That is when I asked to close the positions at 5945 and the market finally closed at 5927.
Today the CHG in OI at CE being added above 5900 (in 6000, 6100) was 19L.
Today the CHG in OI at PE being added Below 5900 (in 5700, 5800) was 16L.
The Overall CHG in OI at CE was 24L
The Overall CHG in OI at PE was 15L
MAX at the individual Strike level,
11.77L added at 6000CE
8.63L added at 5800PE
So base is being built at 5800PE, which would be anyway Tested.
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Please use the MAX Pain only for taking positional Trades or during Expiry.
For Positional trades if the current NIFTY value is away from MAX Pain by around 4%-5% (240-300 points in NIFTY), then take a Trade which will lead you to the MAX Pain. The Expiry strategy we covered in the last 4 days.
Otherwise do not give much importance to MAX Pain. The Series is just now starting.
There was may be one more observation which people can use to take positions at the end of the Expiry.
At the end of the AUG-13 expiry, the AUG-13 MAX Pain was at 5400 but the SEP-13 MAX Pain was at 5500. Which indicates that the SEP-13 will go up. So somebody could have taken a BUY call.
Similarly At the end of the SEP-13 Expiry the MAX Pain of SEP-13 was at 5850-5900 but the OCT-13 MAX Pain was at 5800. So somebody can start the Series with a SELL call.
I don't know if it works always. It is just my observation. So people need to observe and build their own system based on the OptionsChain data.
```````````````````````````````````````````````
Those who Trading with the Options, and looking for A direction, Also please look at the cell M46. This is calculated based on the traditional wisdom of reading the Options Chain.
That is
When the CE NET CHG +ve and the COI +Ve - Bullish - Long Build
When the CE NET CHG +ve and the COI -Ve - Bullish - Short unwinding
When the PE NET CHG +ve and the COI +Ve - Bearish - Long build
When the CE NET CHG +ve and the COI -Ve - Bullish - Long unwinding
So accordingly the Market is now become FLAT
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Why November we can buy OCT-13 Series put itself, which would be cheaper? NOV-13 might be costly given the current volatility? Plus it is better to wait till Friday to take the Short positions because normally the NIFTY Range which is 500 points for this series is only 400. INFY might change the Range from 5700-6100 to 5700-6200. So let us wait till Friday to take Short positions. Now the Trend is UP, So let us not think about DOWNside now.
One more important point is that we should always Trade at least 150-200 points away from MAX Pain so that we can be sure. Let us suppose if 5700-6200 becomes the Range then MAX Pain would become 5950 (Average of 5700 and 6200). So we should Take our positions at least around 6100
```````````````````````````````````````````````
Rule 1 to 6 are more general Rules. Now comes the most important Rule. With all these Rules we have to now take a position. The possible options we have are
Naked Options
Debit Spreads
Credit Spreads
I will put down my experience on the above. So use these more as an observation and not as a Rule because I am still learning.
For Naked Options and Debit Spreads we want the VOLT to increase or Stay ASIS but we definitely don't want the VOLT to come down which will hurt our positions. From My experience the VOLT increases when the Market goes down and the VOLT Decreases when the Market goes UP. VOLT is also a function of INDIAVIX. So you can use VIX and VOLT interchangeably.
So General Rule would be
- Go for Debit Spreads when you feel that the market is on DOWN TREND
- Go for Credit Spreads when you feel that the Market is on an UP TREND
So the basic assumption is on the VOLT. Now in a REAL BULLISH market, VOLT can Go UP also. Now somebody can say that Market has moved from 5100 to 6100. Will you not call it a BULL market. The answer from my point of view is NO, it is not a BULLISH market.
After all these rules, We have to finally Take a call on where the market will Go. UP or DOWN. The second thing is we also need to have an idea on Where the VOLT will go, UP or DOWN. So a combination of Market Trend and VOLT should help take the Debit Spread or Credit Spread.
VOLT UP + MARKET UP = Debit Spread = REAL BULLISH Market
VOLT UP + MARKET DOWN = Debit Spread = REAL BEARISH Market
VOLT DOWN + MARKET UP = Credit Spread = REVERSAL
VOLT DOWN + MARKET DOWN = Credit Spread = REVERSAL
So you can see that finally it is a GAME OF VOLT and we end UP predicting the VOLT
JULY-13 - Market was going UP - VOLT was flat and so Credit Spreads were profitbale
AUG-13 - Market was going DOWN - VOLT was going UP - Debit Spreads would have been profitable
SEP-13 - Market was going UP - VOLT was going DOWN - Credit Spreads would have been more profitable
OCT-13 - So far Market is going UP - VOLT is coming down - Credit spreads would have been profitable.
One more important data you have to observe is that the INDIAVIX normally is in the Range of 20-25 for the majority of the time and where all our General Rules would be successful.
```````````````````````````````````````````
My view on how to Set the FULL Target for a Trade and Stoploss
This is just for a discussion and debate and based on my observation. So please pass your comments accordingly.
I always notice and Read that the tips providers and the experts always provide a Target of 1% for an entry and stoploss say 20% or 40%
Why not the Target be 1.2% from the Low? Those who follow my thread will notice that I always look for say 60+ points in NIFTY. If you look at the OAT you will notice that it is 1.2%.
So where is this extra .2% or 20 basis points coming from?
Can we also use the 1.2% for other stocks?
My view is that the extra 20 basis point is basically the VOLT in FOVOLT. For NIFTY the VOLT is around 20%. so you can always set the Target for the extra 20 basis points.
Today If you look at the MCDOWELL-N, it made High of NOT 2% but 2.8%. Because the for Every 1% rise the VOLT of MCD is .44 or 44 basis points and so MCD made 2.88%.
So next time when you set the Target look at the FOVOLT and Set your Target accordingly. Why to loose the 20 or 80 basis points?
In the new version of OAT, I also use the VOLT to get my BUY / SELL signal. The VOLT would be normally used to make that extra spike and cheat the Retail traders and to make them hit the stoploss and so if keep the Stoploss as 20% for every stock, you are more likely to hit the Stoploss. So if your stoploss 20% then set it as 20% of 1.22% of NIFTY of 20% of 1.44% of MCDOWELL-N.
Try this for other stocks and Let me know If I make any sense.
```````````````````````````````````
Hi,
I think I had already explained the logic when I posted the new chart for the first time. Let me explain it again.
Let me take a simple Example.
Let us take 2 Major Pivot Lows, 5973 and 5986
Two Major Pivot Highs 6212 and 6173.
Now the Trend is basically the Average of the above which is 6086. So for now 6086 would be your Trend line or Pivot line. In the Excel there is a Function called TREND to calculate the Trend of a given Set of numbers, which would give you a Straight line.
After finding out the Trend, Calculate the Standard Deviation or Standard Error from the Trend and the four points
6086- 5973 = 113
6086- 5986 = 100
6212 - 6086 = 126
6173 - 6086 = 87
Now calculate the Average of 113, 100, 126, 87. You get 106.
Now Plot a Line of RESISTANCE at 6086 + (106 * 1.20) = 6213
Plot of Line of Support at 6086 - (106 * 1.20) = 5959
Where 1.2 = 1 + FOVOLT of the Stock. For NIFTY the VOLT is around 20% and so I am adding 20% more.
Now If you get above 6213 you can SELL and if you get below 5959 you Can Buy.
I have explained with just four pivots. If you do the same calculation with say 40 Pivots, Your Trend would be little more accurate.
If you notice this is what most the oscillators or the RSI indicators will do. They will Tell you if a stock is oversold or overbought.
One of the most important thing is that I have customized using the FOVOLT of the Stock. So that we capture VOLT and we get a little bit accurate signal
``````````````````````````````````````
This is a Excel function that I had written in my OAT Tool to fetch the FOVOLT file from NSEindia.com site.
See if you are able to understand
This will download the file for example the 14-FEB-2014 FOVOLT data
http://www.nseindia.com/archives/nsc...T_14022014.csv to the sheet FOVOLT in my OAT tool.
If you have a .CSV file you can apply the same logic to download any .CSV from anywhere in the net to any excel sheet
'****************************************************************************
'**************************** FUNCTION TO GET THE NSE FUTURES VOLATILITY DATA
'****************************************************************************
Public Sub GetVolatilityDataFromNSEIndia()
Dim ws As Worksheet, strFile As String
Dim EndDate As Date
Dim wd As Long
Dim myQueryTable As QueryTable
On Error Resume Next
Dim qTable As QueryTable
For Each qTable In RAJMTP.Worksheets("FOVOLT").QueryTables
qTable.ResultRange.ClearContents
qTable.Delete
Next qTable
Set ws = RAJMTP.Worksheets("FOVOLT")
If (TimeSerial(Hour(Now), Minute(Now), Second(Now)) > TimeSerial(Hour(TimeValue("4:00:00 PM")), Minute(TimeValue("4:00:00 PM")), Second(TimeValue("4:00:00 PM")))) Then
EndDate = DateSerial(Year(Now), Month(Now), Day(Now))
Else
EndDate = DateSerial(Year(Now), Month(Now), Day(Now) - 1)
End If
wd = Weekday(EndDate)
If (wd = 7) Then
EndDate = DateSerial(Year(EndDate), Month(EndDate), Day(EndDate) - 1)
ElseIf (wd = 1) Then
EndDate = DateSerial(Year(EndDate), Month(EndDate), Day(EndDate) - 2)
End If
strFile = "http://www.nseindia.com/archives/nsccl/volt/FOVOLT_" & Format(EndDate, "ddmmYYYY") & ".csv"
Set myQueryTable = ws.QueryTables.Add(Connection:="TEXT;" & strFile, Destination:=ws.Range("A3"))
With myQueryTable
.Name = "FOVOLT"
.FieldNames = True
.RowNumbers = False
.RefreshStyle = xlOverwriteCells
.SavePassword = False
.SaveData = False
.AdjustColumnWidth = False
.RefreshPeriod = 0
.WebSelectionType = xlEntirePage
.WebFormatting = xlWebFormattingNone
.WebPreFormattedTextToColumns = True
.WebConsecutiveDelimitersAsOne = True
.WebSingleBlockTextImport = False
.WebDisableDateRecognition = False
.WebDisableRedirections = False
.TextFileParseType = xlDelimited
.TextFileCommaDelimiter = True
End With
myQueryTable.Refresh BackgroundQuery:=False
For Each qTable In RAJMTP.Worksheets("FOVOLT").QueryTables
qTable.Delete
Next qTable
End Sub
````````````````````````````````````````
Never buy a OTM Call or the Strike where there is Resistance or Support because those are candidates for SELLING.
For example if as per the Hourly chart if the Support is at 7250 and Resistance at 7395 and if the Bias is UP side, Then the strategy might be
SELL 7200PE/7250PE-7400CE/7450CE
Buy 7300CE / 7350CE
```````````````````````````````````````
First of all i never said the June would clse between 7250 and 7400. The levels were looking at the Hourly chart.
1. For Selling in NIFTY I have some magic Premium numbers. Otherwise I don't sell. The magic number is around 120.
When we sell at 120, normally the Reversal will happen around 90 (30 points), If there is no reversal then the next target would be 60 (another 30 points from 90).
So sometimes when you don't get a pair for 120 in the second or thid week, Look for a pair with a premium of 90 points... But you have to keep watching the pair.
I will sell only when the combine premium of the Call and the Put is around 120. IF ALL is WELL, it will surely give 30 points.
For example today the MAX COI was in 6800PE-7300CE and the Combined premium is 126. So it is a candidate for Selling.
2. And the other point is the difference between the strikes should be around 500 points. Last week I sold 7000-7500 and the difference is around 500.
The difference between 6800 and 7300 is once again 500 points.
3. The Last point is when the MAX OI pair is not at 120 or 90. Find a COI pair so that the combined premium is around 120...
Some simple number crunching to show the profits one can get in SELLING and those who believe that Selling options will not give a HUGE Profit.
There are 4 weeks in the Expiry.
The combines premiums starts at 120 and roughly there are 20 trading days. Since we are selling we are looking for some 120/20 = 6 points to erode every day. And Ideally if you have chosen the right pair in the beginning of the month, you should get the Full 120 points.
At the end of the first week, the 30 points would be lost and 120 will become 90
At the end of the second week another 30 points would be lost and 90 will become 60.
In the third week 60 will become 30
And on the dayy of expiry 30 will become 0.
So Ideally if somebody has a Capital of 1 Lakh then they can SELL 200 quanities and ideally they can get a profit of around 200 * 120 = 24000 in a month. Even if one gets 10000 then it is a huge profit. On top of this if one can intelligently combine it with a Long Put or Call then they can make more profit.
I have been observing the Premiums and this is how it happens.... You can take a pair and watch the Premiums before you believe
For example take the Pair 6800-7300 and See the Pair's value on 26-Jun-14.
So how do we find the pair for Stocks.
For NIFTY it works like these and it should work in a similar fashion for Stocks also.
For NIFTY since you need minimum two strikes to SELL the Difference would be 100 points. Add 20% (NIFTY Historic Volatility). that would be 120 points. So ideally on Week 1 of Expiry you should be able to find a Pair with a Premium of around 120.
Let us take SBIN.
SBIN Strike is 20 points. And the HIST VOLT is now at 60%.
So we would need to find a pair whose value would be 20+20=40 + 60% * 40 = 40 + 24 = 64.
The MAX OI is at 2500-2700 with a combined premium of 120. But we would need only 64 points. So we can choose outside 2500-2700. Say 2260-2760 with a comined premium of 68.
So everyday you should get around 3.2 points.
By the end of First week 64 should become 64-16 = 48
Second week 48 should become 32 and so on ...
Please observe and take your own decision to trade... I might be wrong... But these are some of my observations and Tips to Enter the SELL positions for PAIR trading.
````````````````````````````````````````
Sorry dear friend. I have been told my many people in this forum that, that would be a foolish act from my side to share my trading system. This tool is based on my five years of hardwork and observation and fine tuning. Even though I have not shared my last version, which is basically giving the levels, I have pretty much shared everything else in the forum. So the last version is for myself. Plus I have not modified my tool for the last 6 months.
But I can tell you there is no Rocket science in my tool or Logic.
I have explained the logic many a times. I will explain it once again for you.
1. For a given set of last 80 candlestick Closing values, Calculate the Trend (I use the excel function called TREND).
2. Then Calculate the standard deviation of these 80 points (I use the excel function STEYX) - You will get a Value XX
3. To the TREND Lines you got from 1, Add the value XX, You should a Get your Trend RESISTANCE.
4. To the TREND Lines you got from 1, Subtract the value XX, You should a Get your Trend SUPPORT.
5. You can add a bit of customization by using the VOLT on top of the RESISTANCE / SUPPORT.
6. I normally calculate two Supports (S1 and S2) and Two Resistances (R1 and R2). Two times XX should give you R2 or S2.
7. To get the MINOR Trend, Repeat the above Steps 1 to 5 using last 30 candlesticks instead of last 80 candlesticks.
In the last 3 months starting from 13-Mar, From the Day I decided to go SLOW, I have been trying only one or two strategies and it works for me. But it will not make me SUPER Rich in a Year. But it has consistently given more than 20% in month. I only Trade options and I mostly SELL options (and sometimes combine with a BUY when I feel there is a Strong direction like Yesterday from 7450/70.). Sometimes I hold my position for a Week just to get 20/25 points.
As long you don't experiment and develop your own system, my opinion is any great system would not be useful for somebody. So please try and develop a system which would suit your trading method.
````````````````````````````````````````
This is comparing the COI in each strike and finding the trend...
7600PE has 126K 7600CE has 458K
7500PE has -31K 7500CE has 80K
7400PE has -2K 7400CE has 156K
7300PE has 848K 7300CE has 2K
Now to calculate Direction, At 7500
The positions is 7500CE+7600CE is greater than 7500PE + 7400PE. So at 7500 more positions in Call and so it is bearish... Same is the case for 7600, 7700, etc...
At 7400, the positions in 7500CE+7400CE is less than the 7400PE+7300PE. So there is more Puts being sold on the lower side like 7300PE has 848K and 7600CE has 458K positions. So it would be bullish from 7400 perspective...
```````````````````````````````````````
In the Hourly charts, NIFTY is trading above R1 but the Minor Trend is Bullish because it was a Good UP move..
So the Put Strikes below 7600 are indicating Bullish 17L Puts Sold below 7600... OR it could be BUY also...
Puts above 7600 are 2.8L - Bearish
Calls below is -2.1 L - Calls getting squared off is Bearish
Calls above 7600 9.3L - Short Build so it is Bearish.
So it is 17L versus 2.8L + (-2.1L) + 9.3L - Still it is Bullish....
From a Overall COI, it is 35L Puts Versus 4.1L Calls - Bullish.
So overall it is Bearish. But since NIFTY was trending UP and not Rangebound, we need to be careful about the move.
So my view is as follows...
IF NIFTY makes a Sharp move below 7610, then we can go SHORT, otherwise it is better to remain Long till 7700.
``````````````````````````````````````
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
`````````````````````````````````````````````
If you want to go for Pair Trading SELL the MAX OI pair.
If you want to Go for Naked Options Buying, Buy the Strike where the MAX OI is present.
For example for the NOV-14 Series, the MAX OI is at 8000-8200. So ideally NIFTY should test 8200. Yesterday it was at 7700-8200. Today moving to 8000-8200 is a bullish signal.
When NIFTY is around 8200,
If you want to do Pair trading, you can sell the Pair 8000PE-8200CE.
Or if you want to do Naked Options Trading, you can buy 8200PE.
Hi All,
I have pretty much shared all the tools that I had developed.
MTP - Many Trades Per-day. Base on FLOW method. This was my first tool. I have seen some modified versions of these tool, which are still used by some.
OTP - One Trade Per-day. This tool was based on High or Low made by a Stock in the first one hour. And based on that one can take a trade. Simple logic like High=Open is SELL. Low=Open is BUY.
Stock Screener - Based on Daily Charts. Will generate signals like NR7, EMA 315, FLOW signal , Based on Pivot High and Low in the Flow (Saint's FLOW method).
OAT - Option-chain Analysis Tool.
Right now I am using the OAT tool only.
The only thing that I have not shared is the latest charts based on Polynomial functions. The charts are based on Google Finance data. For any Serious or Professional trading I would not suggest Google finance data. For charts better to look for some professional tools. Moreover all the tools that I developed is only learning purpose and not for Professional trading.
I am not spending too much time on any tools right now since I have no time for that. The reason why I had stopped hosting the tools in my 4shared folder. The most important thing is that I have pretty much shared all the source code along with the tools. When I say source code, I have created a lot of functions
- To download Google Finance data
- To download the Web data like Options chain.
- To download the .csv files
So using those functions, one can further enhance your tool. I know that there are a lot of IT Guys in this forum. So I suggest that you guys can get together, put down your ideas and develop any new tools that you are interested. I might also contribute like each and everyone of you, if you guys are interested. There are also so many folks who promised to write down the usage of OAT in word / pdf / ppt document, so that it can be useful for the freshers. But I have not seen one.
I have pretty much shared all the tools that I had developed.
MTP - Many Trades Per-day. Base on FLOW method. This was my first tool. I have seen some modified versions of these tool, which are still used by some.
OTP - One Trade Per-day. This tool was based on High or Low made by a Stock in the first one hour. And based on that one can take a trade. Simple logic like High=Open is SELL. Low=Open is BUY.
Stock Screener - Based on Daily Charts. Will generate signals like NR7, EMA 315, FLOW signal , Based on Pivot High and Low in the Flow (Saint's FLOW method).
OAT - Option-chain Analysis Tool.
Right now I am using the OAT tool only.
The only thing that I have not shared is the latest charts based on Polynomial functions. The charts are based on Google Finance data. For any Serious or Professional trading I would not suggest Google finance data. For charts better to look for some professional tools. Moreover all the tools that I developed is only learning purpose and not for Professional trading.
I am not spending too much time on any tools right now since I have no time for that. The reason why I had stopped hosting the tools in my 4shared folder. The most important thing is that I have pretty much shared all the source code along with the tools. When I say source code, I have created a lot of functions
- To download Google Finance data
- To download the Web data like Options chain.
- To download the .csv files
So using those functions, one can further enhance your tool. I know that there are a lot of IT Guys in this forum. So I suggest that you guys can get together, put down your ideas and develop any new tools that you are interested. I might also contribute like each and everyone of you, if you guys are interested. There are also so many folks who promised to write down the usage of OAT in word / pdf / ppt document, so that it can be useful for the freshers. But I have not seen one.
For Intraday, I think you have to look at the COI. The MAX COI is at 470-500. Made low of 474 SPOT. So may be it is a Buy around 470. But in the Daily Futures Chart, the TREND is down. So instead of Buying on Lows, Try to SELL on highs of 500/505 Futures. Breaking 470 will take it to 445.
May be before going down it might test 500/505 once again.
So the Trading range is 470-500. Buy around 470 and SELL around 500.
May be before going down it might test 500/505 once again.
So the Trading range is 470-500. Buy around 470 and SELL around 500.
Somebody requested to unlock this OI file ...... http://www.************/office/9uUWyUIKce/Nifty_OI_analysis_Locked.html
here it is ..may be useful ... Thanks to original author for his knowledge and RIPPPPPP to user who locked this
http://www.***********/office/IYJvRQBPba/Nifty_OI_analysis_UnLocked_Avi.html
here it is ..may be useful ... Thanks to original author for his knowledge and RIPPPPPP to user who locked this
http://www.***********/office/IYJvRQBPba/Nifty_OI_analysis_UnLocked_Avi.html
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