PUT and CALL options

[columbus]

Jan.6 JAN series.8 Nifty=8127 (-251)

The Expected Zone has expanded downwards to (8600~8000) from (8600~8300) .


Open Interest (Today) over 5 Lakhs is indicated in YELLOW bold. (If any)
Open Interest (Today) less than -5 Lakhs is indicated in YELLOW italics. (If any)


7 strikes on CALL side and 7 strikes on PUT side from the current strike ,as shown ,are analyzed.

Huge accumulations are seen on CALL side.This is in anticipation of some REVERSAL.

 

[anilpalan]

Re: Jan.6 JAN series.8 Nifty=8127 (-251)

The Expected Zone has expanded downwards to (8600~8000) from (8600~8300) .


Open Interest (Today) over 5 Lakhs is indicated in YELLOW bold. (If any)
Open Interest (Today) less than -5 Lakhs is indicated in YELLOW italics. (If any)


7 strikes on CALL side and 7 strikes on PUT side from the current strike ,as shown ,are analyzed.

Huge accumulations are seen on CALL side.This is in anticipation of some REVERSAL.

Hi Columbus,

How do we decide that huge accumulation are seen on CALL side.

Can this large increase in Call OI not be judged as Short selling in Call options.

 

[columbus]

Re: Jan.5 JAN series.7 Nifty=8378 (-17)

Columbus,

Apologies for my ignorance . Any specific reason as why you pick particularly 5 strikes on CALL side and 5 strikes on PUT side from the current strike ?

I thought we need to take Calls whose values range from 40 to 400(CE 8550 to CE 8000) and Puts ranging from 40 to 400(PE 8250 to PE 8850) as this is 2nd week of 5week expiry Jan 2015 and finally wont the overlap range changes to 8250 to 8550 from yesterdays 8300 to 8600 .

Hi Robin,

Generally ,I analyze ,4~8 strikes in the beginning of the series.This is based on the number of strikes
in the zone and also strikes where good accumulation is seen.Needless to say ,it does not
follow any formula ,but on just observation.

You are confused between Nifty options and Bank nifty options.
Nifty options gives a definite boundary because a prominent JUMP in TOTAL-OI is seen.
(Say from Lakhs to millions).But in case of Bank nifty options there is no such JUMPS
and also OPEN INTEREST in bank nifty is rather poor, so we use we mark the
boundaries using some formula.

 

[columbus]

Re: Jan.6 JAN series.8 Nifty=8127 (-251)

Hi Columbus,

How do we decide that huge accumulation are seen on CALL side.

Can this large increase in Call OI not be judged as Short selling in Call options.

Hi anilpalan,

Your are 100% Correct. It can be due Call Option writing.(Short selling in Call options).
Call Option Writing takes a lot of money.Most of the Retail option players like Naked
options since they take very less money.The story is different with Aggressive players and FIIs.
That is the main reason ,why we should be carried away when we see huge figures on one side.

 

[ankurpcl]

To add more on this, as we know for every contract there is buyer and seller. So increase in OI for some traders seen as buying and for some traders seen as selling but in reality its combination of both. So rather than analyzing which one more stronger spend more time in understanding what direction market wants to move on. And then plan your trades accordingly. Good thing which both FIIs buyers and sellers is that they have plan to reduce losses if anything goes against their anticipation and for this reason only you have seen huge OI build up in calls side yesterday.

If any trader come and says he has complete technical knowledge of options Greeks and other technical stuff and still if he is in losses reason for same is his inability to understand market direction and spending more time in calculating technical stuff.

So an average guy with average market knowledge can create wonders as well compared to experts which claim to have very high technical knowledge in this area.

 

[columbus]

Jan.7 JAN series.9 Nifty=8102 (-25)

The Expected Zone is at (8600~8000) for SECOND day.


Open Interest (Today) over 5 Lakhs is indicated in YELLOW bold. (If any)
Open Interest (Today) less than -5 Lakhs is indicated in YELLOW italics. (If any)


7 strikes on CALL side and 7 strikes on PUT side from the current strike ,as shown ,are analyzed.

 

[columbus]

Jan.8 JAN series.10 Nifty=8235 (133)

The Expected Zone has condensed with 8600 on TOP at (8600~8200) from (8600~8000).


Open Interest (Today) over 5 Lakhs is indicated in YELLOW bold. (If any)
Open Interest (Today) less than -5 Lakhs is indicated in YELLOW italics. (If any)


6 strikes on CALL side and 6 strikes on PUT side from the current strike ,as shown ,are analyzed.

The boundaries of the windows are taken at approx 3 Million on 3 sides ,in keeping with
view of increasing in TOTAL-OI during the series.

 

[columbus]

Jan.9 JAN series.11 Nifty=8285 (50)

Strangely enough,the Expected Zone has condensed at (8500~8200) from (8600~8200).


Open Interest (Today) over 5 Lakhs is indicated in YELLOW bold. (If any)
Open Interest (Today) less than -5 Lakhs is indicated in YELLOW italics. (If any)


5 strikes on CALL side and 5 strikes on PUT side from the current strike ,as shown ,are analyzed.

The boundaries of the windows are taken at approx 3 Million on 3 sides ,in keeping with
view of increasing in TOTAL-OI during the series.

 

[mterminator]

The data is taken from NSE website.( minus ASK/BID quantity and prices)

1.A abnormal change in Total-OI gives one boundary.

2.Then check CHANGE in PRICE and OI-Today and strikes are marked accordingly.

3.Price less than Rs.10 are grey-ed out.

Thanks Columbus. pls let me know if my below understanding is correct?


Call Side
Strong : Market is gaining momentum, sentiment is bullish
Weakening : Market has rallied higher, bulls are trying to fizzle out, investor booking profit
Weak : Investors are trying to get in on lower price on expectation of rally
Strengthening: Markets has given up its gains, sentiment is turning bearish


I am not sure why Open Int Down and Price Down is labelled as Strengthening.

Or did i completely misunderstood the labeling?

 

[columbus]

Thanks Columbus. pls let me know if my below understanding is correct?


Call Side
Strong : Market is gaining momentum, sentiment is bullish
Weakening : Market has rallied higher, bulls are trying to fizzle out, investor booking profit
Weak : Investors are trying to get in on lower price on expectation of rally
Strengthening: Markets has given up its gains, sentiment is turning bearish


I am not sure why Open Int Down and Price Down is labelled as Strengthening.

Or did i completely misunderstood the labeling?

These are some definitions taken from experience and well documented.

There are some people ,who do not believe in Open Interest.But something is better
than noting.(Any way , it should *not *land you in wrong side, always.)

Source:wikipedia