NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
OI numbers what we see are result of what already happened in the market.
so it is not certain that, now market should move as what is hinted by option chain at this point.
Do not think that OI will always change prior to price and will give you reversal signals.
OI changes occur parallel to market movement, and that is why by the time you notice changes in OI signalling a direction, you will see market has already taken that move.
So most of the times option chain analysis on eod will look like a cooked dish.
but real time it is
so it is not certain that, now market should move as what is hinted by option chain at this point.
Do not think that OI will always change prior to price and will give you reversal signals.
OI changes occur parallel to market movement, and that is why by the time you notice changes in OI signalling a direction, you will see market has already taken that move.
So most of the times option chain analysis on eod will look like a cooked dish.
but real time it is
Expecting your comments on the same.
Specially with the way things turnaround today this seems logical.
Hello Seniors and Mr. Raj,
Need help. Can u guide to some of the important posts under this thread so as to understand how to utilize this tool of yours.. Its like more than 700 threads that's why.. If you feel one should through all.... then will have to go through them and then come back with some questions. Also downloaded the xls file but its not working.. can u show the path how to use it??? thanks...
HS
Need help. Can u guide to some of the important posts under this thread so as to understand how to utilize this tool of yours.. Its like more than 700 threads that's why.. If you feel one should through all.... then will have to go through them and then come back with some questions. Also downloaded the xls file but its not working.. can u show the path how to use it??? thanks...
HS
Hi,
Going back to fundamental reason of this thread,
Raj developed the system to give us an edge in executing short straddle strategy. Looking at the MAX OI position we need to sell OTM CALL - PUT pair. That was the primary strategy.
My observations over last 2 - 3 months:
1. Option chain analysis is not appropriate for positional / day futures trading (Raj developed a separate tool for that called MTP).
2. The COI action 15 - 20 mins after market opens gives a good idea about direction ( bullish / bearish ). E.g there were no put writers yesterday in the 1st half so it was a very bearish day. Today there are no call writers so ...... you get the idea
3. The average of call - put COI gives a pretty good idea about the range and target for the day.
4. Like all technical indicators option chain analysis may give wrong signal / frequently changing signal in an extremely volatile market (like we have seen in last 4- 5 sessions)
Mohan is correct in saying option chain will not always give a reversal signal before it happens. It however gives a clear vision of market direction which is all a trader need to stay with the market direction
Going back to fundamental reason of this thread,
Raj developed the system to give us an edge in executing short straddle strategy. Looking at the MAX OI position we need to sell OTM CALL - PUT pair. That was the primary strategy.
My observations over last 2 - 3 months:
1. Option chain analysis is not appropriate for positional / day futures trading (Raj developed a separate tool for that called MTP).
2. The COI action 15 - 20 mins after market opens gives a good idea about direction ( bullish / bearish ). E.g there were no put writers yesterday in the 1st half so it was a very bearish day. Today there are no call writers so ...... you get the idea
3. The average of call - put COI gives a pretty good idea about the range and target for the day.
4. Like all technical indicators option chain analysis may give wrong signal / frequently changing signal in an extremely volatile market (like we have seen in last 4- 5 sessions)
Mohan is correct in saying option chain will not always give a reversal signal before it happens. It however gives a clear vision of market direction which is all a trader need to stay with the market direction
Hi Souma,
I want to add 2cents from my end.
- I read somewhere that OI analysis wont work for trending market.
- Moreover Raj mentioned somewhere, any given day if the VIX is up for 5% then better to close the position as more positions are being built in OTM calls and puts. Better to settle down the Vix and take a trade.
So as per my understanding, on 6th May in the morning itself one should have closed their position and waited for VIX to settle.
@ Raj: Please provide your thought on the above points.
I am still learning. I need clarification on this from seniors.
Thanks..!!
Hardik Shah
I want to add 2cents from my end.
- I read somewhere that OI analysis wont work for trending market.
- Moreover Raj mentioned somewhere, any given day if the VIX is up for 5% then better to close the position as more positions are being built in OTM calls and puts. Better to settle down the Vix and take a trade.
So as per my understanding, on 6th May in the morning itself one should have closed their position and waited for VIX to settle.
@ Raj: Please provide your thought on the above points.
I am still learning. I need clarification on this from seniors.
Thanks..!!
Hardik Shah
Hi,
Going back to fundamental reason of this thread,
Raj developed the system to give us an edge in executing short straddle strategy. Looking at the MAX OI position we need to sell OTM CALL - PUT pair. That was the primary strategy.
My observations over last 2 - 3 months:
1. Option chain analysis is not appropriate for positional / day futures trading (Raj developed a separate tool for that called MTP).
2. The COI action 15 - 20 mins after market opens gives a good idea about direction ( bullish / bearish ). E.g there were no put writers yesterday in the 1st half so it was a very bearish day. Today there are no call writers so ...... you get the idea
3. The average of call - put COI gives a pretty good idea about the range and target for the day.
4. Like all technical indicators option chain analysis may give wrong signal / frequently changing signal in an extremely volatile market (like we have seen in last 4- 5 sessions)
Mohan is correct in saying option chain will not always give a reversal signal before it happens. It however gives a clear vision of market direction which is all a trader need to stay with the market direction
Going back to fundamental reason of this thread,
Raj developed the system to give us an edge in executing short straddle strategy. Looking at the MAX OI position we need to sell OTM CALL - PUT pair. That was the primary strategy.
My observations over last 2 - 3 months:
1. Option chain analysis is not appropriate for positional / day futures trading (Raj developed a separate tool for that called MTP).
2. The COI action 15 - 20 mins after market opens gives a good idea about direction ( bullish / bearish ). E.g there were no put writers yesterday in the 1st half so it was a very bearish day. Today there are no call writers so ...... you get the idea
3. The average of call - put COI gives a pretty good idea about the range and target for the day.
4. Like all technical indicators option chain analysis may give wrong signal / frequently changing signal in an extremely volatile market (like we have seen in last 4- 5 sessions)
Mohan is correct in saying option chain will not always give a reversal signal before it happens. It however gives a clear vision of market direction which is all a trader need to stay with the market direction
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