NIFTY Options Trading by RAJ

[healthraj]

MAX OI at 8600-9000.
MAX COI @ 8600-8700.

As long as MAX COI/OI @ PE Remains at 8600, It will act as the Support

As per the Hourly charts, it is trading near the Support.
As per the Daily Futures , there is BUY signal from 8385 and right now trading near the Pivot.

MAX Pain is also at 8600.

So 8600 is an important level to Watch. Better to take fresh positions on Monday

At EOD, MAX COI @ 8500-8700 and OI changed to 8500-9000 from 8600-9000. So may be there is a Surprise on Monday.

As per the Weekly Charts, the Major Trend Support is at 8620. Minor Trend Support is at 8485.

In Daily Future Charts the Minor Trend Support is at 8485 and Major Support is at 8365.

So one has to watch the Levels 8620 and 8485 on Monday.

 

[mohan.sic]

I normally take the COI levels for Intraday.



It does not work always... For example the MAX OI for Reliance was at 820-900 for the past three days. But Reliance made high of 940... But the MAX OI did not change... Today finally the MAX OI changed to 900-940. So when the STOCK / Index is completely going in one direction like RELIANCE, it was steep Climb from 810 to 940 without much resistance...

This OI chain analysis is not good on stocks. In 80% of stocks max OI will be found at max 2 strikes away from current stock level. When a stock takes directional move it easily reaches the strikes when max Oi is concentrated.
So its not a good idea to take a short position when price reached the strike with max OI in calls.

OI logic works when stocks are not trending. But in a trend it simply fails.
This applies to nifty also. However in nifty the advantage is, trader will get time to realize and come out with minor loss. For example, if at the current level the max OI Put side is at 8600 put, it acts as a support. But if the trend is down it breaks. But not easily. We can see some what flattish/little choppy movement around 8600 level for sometime and during this time OI building up in 8500 PE can be observed making it the strike with max PE OI. But the problem with stocks is, traders don't get time to come out. Some times stocks can even see gap ups/ down's at these levels. OI changes after price changes unlike in nifty where at least the levels hold till shift in MAX OI strikes happens.

 

[agos]

Raj Sir,

Thanks for the clarification on Reliance.
Had a small question with the nifty pair selling strategy (max OI based - postional) at the extremes.
What in case there is a breakout at the extreme point. Do we need some adjustments to be done in case of a breakout or should we come out with a loss.

 

[healthraj]

Raj Sir,

Thanks for the clarification on Reliance.
Had a small question with the nifty pair selling strategy (max OI based - postional) at the extremes.
What in case there is a breakout at the extreme point. Do we need some adjustments to be done in case of a breakout or should we come out with a loss.

In my experience, I have not seen a BREAKOUT of OI in NIFTY. There is only one exception when the OI range is itself is around say 200 points, then you can expect a BREAKOUT in the last week of expiry. Otherwise no problem.

In case of Breakout, if the stoploss is hit, then close your positions. I do not believe in adjustments.

 

[rajesh_]

Strange excel showing OI as 8500-9000.

 

[healthraj]

At EOD, MAX COI @ 8500-8700 and OI changed to 8500-9000 from 8600-9000. So may be there is a Surprise on Monday.

As per the Weekly Charts, the Major Trend Support is at 8620. Minor Trend Support is at 8485.

In Daily Future Charts the Minor Trend Support is at 8485 and Major Support is at 8365.

So one has to watch the Levels 8620 and 8485 on Monday.

MAX OI and COI @ PE pointing to 8500 indicating that it might test 8500. This was also indicated on Friday EOD. The RALLY was mostly led by RELIANCE and so is the DOWN Move. If NIFTY touches 8500 then RELIANCE also might test 900 or less.

 

[soumanag]

I normally take the COI levels for Intraday.

For NIFTY if the COI Range is say less than say 200 points, The first target is safely assumed to be the average of the COI. If we know the Trend then the COI @ PE or CE will be target.

But it does not work always. The most difficult part is deciding
1. The Trend for the Day
2. Deciding if it would be Trending or FLAT.

Once you know the above 2, then you can use the COI to find the levels.


...

In the morning the COI range was 8500 - 8600 so the target was 8550 which has already been tested.
Clearly the market is in bear trend till now if things remain same it should go towards CALL MAX COI levels... lets see what happens. Two major assumptions
1. Market in clear bearish trend
2. COI levels would remain same more or less i.e market would trend in the same direction
Thanks Raj for the new funda

 

[healthraj]

MAX COI changed to 8700PE-8600CE. Whenever the PE strike COI is more than the CE Strike COI it normally indicates a Reversal.

So it is better not to be overly Bearish.

Europe has opened in Green and is also putting pressure on the BEARS.

Watch 8575 SPOT and Take a CALL accordingly.

 

[soumanag]

MAX COI changed to 8700PE-8600CE. Whenever the PE strike COI is more than the CE Strike COI it normally indicates a Reversal.

Hi Raj,

Would this hold even when COI is -ve? Generally -ve OI for PUT is bearish

 

[healthraj]

Hi Raj,

Would this hold even when COI is -ve? Generally -ve OI for PUT is bearish

Negative COI means profit booking and so we can expect a Reversal after the profit booking