Open Interest vs Trading Volume in Options trading- Very important

Open Interest

If a buyer and seller come together and initiate a new position of one contract, then open interest will increase by one contract. Should a buyer and seller both exit a one contract position on a trade, then open interest decreases by one contract. However, if a buyer or seller passes off their current position to a new buyer or seller, then open interest remains unchanged.

Open interest is just the contracts that are created(buy of 1 lot and sell of 1 lot will give 1 Open interest) are created. If an options contract exists, it must have had a buyer and also for every buyer, there must be a seller since you … Read the rest

BankNifty weightage cpr strategy

BankNifty weightage cpr strategy

The NIFTY Bank Index includes the most liquid and significant banking firms in India. It serves as a benchmark for investors and market intermediaries, capturing the capital market performance of Indian banks. The Index includes a maximum of 12 companies that are publicly traded on the National Stock Exchange of India (NSE).
The free float market capitalization approach is used to calculate the NIFTY Bank or BankNifty Index.

As on December 31, 2021 Constituents and Weightage

         Company’s Name                               Weight(%) 

  1. HDFC Bank Ltd.                                           27.80
  2. ICICI Bank Ltd.                                           22.62
  3. Kotak Mahindra Bank Ltd.                         11.61
  4. Axis Bank Ltd.                                              11.52
  5. State Bank of India                                      11.45
  6. IndusInd Bank Ltd.                                      5.91

Above six stocks are the main CONSTIUENTS of banknifty Total weightage … Read the rest

Options Greeks and its impact on options

What are Options Greeks? how to use them for your favor?

The majority of the time, Options Greeks are turned down owing to their complex mathematical calculations and inability to comprehend them. 
Instead of attempting to calculate the values of such Options Greeks, let us attempt to define them and at the very least determine their utility in our daily option trading.
It would be impossible to compute each and every Option Greek of our position unless one were a mathematician. 
There is, however, a simple solution because there are various systems available today that assist us with Options Greeks of our overall options positions.

 

Why should you consider Options Greeks? 

Because they provide insight into the various options 
… Read the rest

OTM Option vertical spread – defined risk and stable profit

What is happening in the markets?

Normally, after a large trend has passed, there is a period of pullback or just plain old consolidation.

What happening in market nowadays is that Nifty has cooled off from 18,400 in recent months.

However, the last few weeks have been unusual in that the Nifty has been moving in large fluctuations, attempting to recover and get back on track before giving up.

Consolidations, particularly choppy ones like the ones we’ve been seeing for the past three weeks, can produce misleading signals. Vertical spreads, on the other hand, could come in handy with Out of The Money (OTM) options.

On a daily basis, the movements have also been relatively large. However, if we look … Read the rest

Checklist for Option trading for Nifty BankNifty

Checklist for Option trading for Nifty BankNifty

1.Check Sensibull for Option chain data for major Resistance and Support

Below you can see more big red bars compared to green bars. The red bars on Call side(left side) are various resistances formed. From sellers perspective Calls selling has more OI which means Sellers are betting than index is not going up tomorrow beyond these resistances which are 17100,17200,17300 and 17500. They are also strong on markets not falling beyond 16500 support.

https://web.sensibull.com/option-chain/?expiry=2021-12-30&tradingsymbol=NIFTY

 

 

2. Check for Option chain data on NSE Site for PCR Ratio

https://www.nseindia.com/option-chain

Check PCR Ratio in Nifty option chain on weekly expiry

 

In above pcr ratio is 12,79,526/14,70,186= 0.87 which is below 1 slightly which … Read the rest

Limited Risk Option trading strategies

What are the most used limited Risk Option Strategies ?

Below are the Limited Risk Option trading strategies with links for most famous ones of all on Quick Hack.

Limited Risk Option Strategy Cheat Sheet
Option Strategy
Price Outlook
Volatility Outlook
Profit Potential
Risk
Long Calls(Naked Call Buy)
 Bullish Rising Unlimited Limited
Long Puts(Naked Put Buy)
 Bearish Rising Unlimited Limited
Protective Put
 Bullish Stable Unlimited Limited
Bull Put Spread
 Bullish Rising Limited Limited
Bear call Spread
 Bearish Falling Limited Limited
Bull Call Spread
 Bullish Rising Limited Limited
Bear Put  Spread
 Bearish Falling Limited Limited
Iron Condors Neutral Falling Limited Limited
Iron Butterfly Spreads Neutral Falling Limited Limited
Calendar Spreads
 Neutral Rising Limited Limited
Double Calendars
 Neutral Rising Limited Limited
Long
… Read the rest

Successful Weekly Options Strategies – Greeks work for you !

How does this tricks work for Successful trading?

The trick works by making the Greeks work for you but not against you like Theta, Delta, Vega.

How to make a Trade on Options based on Trading day

Highest decay in Option premiums happen closer to the expiry.

For weekly options

  1. On Start of weekly options say Friday and Monday you can look for buy strategies with limited risk and limited reward using the Option strategies like Bull Call spread etc.. based on market outlook. Or even long iron condor if you anticipate a huge movement on any side.  Long straddle and Long straddle can also be used.
  2. On Towards end of Week that is Wednesday and Thursdays, time decay is
… Read the rest

Option Greeks for Weekly Options – Way to success ?

What are Option Greeks?

If you trade options, you are probably familiar with the concept of option Greeks. 
These are sensitivities scales. 
Option Greeks effectively measure the sensitivity of the option price to various parameters that influence the value of an option. 
Such sensitivity can be on either the positive or negative side. 
When we talk about the option price, we’re referring to the option’s value as calculated by the Black & Scholes model.

What questions we need answer to?

  1. nifty option greek values
  2. option greeks zerodha
  3. greek option trading strategies pdf – Will be provided soon upon request in comments
  4. what is a good delta for options – 0.4 to 0.6
  5. option greeks explained
  6. what is a good theta
… Read the rest

Option Strategies with Greeks

Option Strategies with Greeks

What are the main Greeks to know for option trading ?

  1. Gamma is the rate that delta will change based on change in the stock price for every point. So if delta is the “speed” at which option prices change, you can think of gamma as the “acceleration.” Options with the highest gamma are the most responsive to changes in the price of the underlying stock.
  2. Theta is the time remaining of options. Options intinsric, extrinsic and time value in the option premiums.
  3. Vega is the volatility (IV or VIX) of the stock or index.

The Advanced Option Strategies with the affect Greeks


1. Long Straddle option strategy

Here we buy or long a call … Read the rest

Secret of Weekly Option Strategy?

Secret of Weekly Option Strategy?

This is due to the general characteristics of options. The greatest time decay occurs at the end of an option’s life. Prior to the availability of weekly options, the benefits of accelerated time decay could only be obtained once a month. There is now a continuous ability to benefit from accelerated time decay. This is due to the general characteristics of options.

Price of option is affected by Theta Greek everyday till expiry but its affect is more near to expiry.

If we divide our Price of option per day then Price per day decay/decline is most near to expiry.

Always remember that price movement can negate the time decay arbitrage, which is why it … Read the rest