Nifty Open Interest Analysis

[sridhar]

Am now also studying Bank Nifty Options data. My queries:-

1. Find volume traded to be a fraction of Nifty Options. Does anyone have experience of whether there is sufficient liquidity for taking positional calls over a time frame of a few days to 10-15 days?

2. Like 7 million OI level is a threshold in Nifty Options, what is the threshold in Bank Nifty Options?

 

[spkreddy]

sridhar bhai..

do you have any idea how to use black scholes cal to nifty?

i am confused that how to use this cal...(mainly which no we should take for Rate of Interest,volatality,dividend...)

if any of one have exp on this please share..thnx in advance

 

[sridhar]

sridhar bhai..

do you have any idea how to use black scholes cal to nifty?

i am confused that how to use this cal...(mainly which no we should take for Rate of Interest,volatality,dividend...)

if any of one have exp on this please share..thnx in advance

I use Option calculator available in Zerodha Trader. I normally take ROI as 10%, volatility from NSE Options data & dividend as nil. I use the Delta value, that the calculator gives, for rough calculations only.

 

[Option.Trader]

All bets are off... news of Unilever buying huge stake in HUL to the tune of 29000Cr... this should hammer down the rupee and then send Nifty up up and away

I hope people would have made profits... the above call was given on 30th april and since then Nifty has moved almost 100 points... be friends with the trend... strong support at 5850..next resistance at 6113

 

[jamit_05]

I hope people would have made profits... the above call was given on 30th april and since then Nifty has moved almost 100 points... be friends with the trend... strong support at 5850..next resistance at 6113

OT

As probable as it may seem, trends do not happen due to reasons, at least not the ones the common man perceives. The twists and turns cannot be predicted. There is no consistent logic to it.

It did seem a little off to me that a "senior trader/analyst" would affirmatively "predict" the trend. That is just not the market reality.

I went about predicting trends; only ended up missing the biggest move of the past 6 months !

Anytime in the future, Please feel free to remind me, in fact I will give Rs.500 to anyone who succeeds in reminding me to:

Stop latching on my ego to trading by predicting the next move of nifty. Just look at the chart and do what it says.​

Please consider the cash as my gratitude towards you, for looking out for me and helping me trade better.

 

[TraderRavi]

OT

As probable as it may seem, trends do not happen due to reasons, at least not the ones the common man perceives. The twists and turns cannot be predicted. There is no consistent logic to it.

It did seem a little off to me that a "senior trader/analyst" would affirmatively "predict" the trend. That is just not the market reality.

I went about predicting trends; only ended up missing the biggest move of the past 6 months !

Anytime in the future, Please feel free to remind me, in fact I will give Rs.500 to anyone who succeeds in reminding me to:

Stop latching on my ego to trading by predicting the next move of nifty. Just look at the chart and do what it says.​

Please consider the cash as my gratitude towards you, for looking out for me and helping me trade better.

thanks for the honest and brave post.........:clapping:

 

[Option.Trader]

OT

As probable as it may seem, trends do not happen due to reasons, at least not the ones the common man perceives. The twists and turns cannot be predicted. There is no consistent logic to it.

It did seem a little off to me that a "senior trader/analyst" would affirmatively "predict" the trend. That is just not the market reality.

I went about predicting trends; only ended up missing the biggest move of the past 6 months !

Anytime in the future, Please feel free to remind me, in fact I will give Rs.500 to anyone who succeeds in reminding me to:

Stop latching on my ego to trading by predicting the next move of nifty. Just look at the chart and do what it says.​

Please consider the cash as my gratitude towards you, for looking out for me and helping me trade better.

Agree with my most of it. Sometimes our biases prevent us from taking sane judgements. I had taken 3 trades 1) sell 5800 pe @92 2) Buy 5900ce @82 and them I got biased by everyone saying 5970 to be "the" resistance especially with rbi giving just25 bps cut and took 5900 pe @78 . Still holding on to 5800 written, but came out to soon on 5900 ce and too late on 5900pe. Interesting year in Nifty, can only make money on writing

 

[jamit_05]

I meant to ask you this question a while ago.


Selling options gives returns in two ways:

1) Favourable price movement
2) Time decay.

Point (1) is in favour of trading NF as opposed to selling options. As it is very clear that when it comes to capturing the price movements, trading NF is better than writing options as the return is, theoretically, unlimited.

NF does not cost or give benefit of decay to the trader. But, writing option does. However, the writer can ONLY take benefit of this gain IF and ONLY IF he gets the trend right. If he gets the trend wrong then time decay won't save him.

In conclusion, he will have to depend on catching the trend. So, why not trade NF then?

Furthermore, the people who are into the business of "eating" premiums, they play the game of Hedging.

They have RT softwares that flash the various greeks and the qualified person executes the hedges. Their only objective is to let the time decay (theta) work for them, and neutralize all other greeks. Since, this process keeps the Delta Neutral the trend is of no use to them.

They make the market, invest a lot of money, and hence get paid in time decay.

So I feel, a trend trader is better-off just trading the Nifty Futures, as opposed to selling one sided options.

 

[manojborle]

6200 CE OI has reached 65 lakhs, so only 5 lakhs remaining.
So does it mean bears are expecting 6200 to be a safe level

 

[jamit_05]

Another thing happens when a rally, even a strong one like this, meets a round figure with OI > 70 L: A daily pivot forms. This pivot may not always bring the rally to a grinding halt, but most certainly limits the upside and often reverses the trend too.

So, whenever a daily pivot forms a trader would be better off being conservative with targets on both sides.