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ULTIMATE MENTORSHIP
Options Buying Reversal setups
 Before thinking about going for options buying with reversal always get clear hint from markets about
reversals

• Check all global markets for trend clarity. Check premarket activities in pro setup of Tredcode to know whether big stocks
are opening gap up or gap down

• Make sure markets are trading with healthy OI and as soon as market starts consolidating and starts forming reversal
patterns change in OI (change in hand ) happens using OI compass in index analysis tool.

• Index trading should be done with tracking major contributor stocks

like if you are willing to trade in bank nifty focus on intraday charts of HDFC bank, icici bank, axis bank, kotak bank charts

• On 5 min chart check out of all major stocks most of near days low and starts taking reversals with POC at bottom And if day
ruled by bears check if major stocks are near days high and with POC appearing near days high with signs of bearishness
REVERSAL TRADING IN OPTIONS

Whenever market makes fresh highs or lows AND shows reversal patterns
we can go for bottom hunting based on these 6 criteria’s

1. OI should give indication change is happening in consolidation.

2. Major stocks showing exhaustion and reversal with shift in POC
3. major OI hurdle or price not able to sustaining above highest OI built-up over the expiry,
you can easily find it on Tredcode
4. If major indices nifty & bn showing divergence in OI built-up we can start focusing on
reversal trade setup
5. VP also giving clear confirmation of volume dominance on one side
6. Track individual strikes using VP for breakout confirmation.
Options behavior

Track options which are ATM and if markets near days high option price also make fresh high,
If option price is under valued that means today heavy theta decay is happening
Avoid trading on such days with naked options
In case you can make spreads or can go for next options expiry

Avoid trading on options having highest OI as generally at the time of breakout we see huge wind up and
swings
In those strikes specially on expiry

Whenever planning to go for options buying observe last consolidation zone on indexes and check if any
major OI
Changes happened using OI compass.

This will provide accurate information if big guys are gearing up for next move.

Generally, V shape rallies are difficult to catch and if such move comes price may revisit for exit big positions
Such times sl needs to be very high and again need to trade along with spreads only.
STOP LOSS IN OPTIONS

It’s a most asked question when comes to place sl in options

Whether it should be %wise or looking at options chart

I personally keep sl looking at future price chart of underlying index.

Long trades with CE buying - For reversals I keep sl in long trades below todays fut low on
5 min
With short trades with PE buying - For reversals I keep sl in short trades above todays fut
high on 5 min

I use price action to get out of trade when hitting sl

Make sure if you are options buyer, be in front of chart for entire position time for manual
exit
If not showing positive outcome
Reversal setup

In bank nifty Whenever price makes consolidation and create rounding bottom, double bottom
Or rectangle box consolidation at days low

Out of 4 major banks 3 are in + - 0.50% -1% near days low with POC at bottom

Check OI compass and make sure earlier CE sellers' dominance is now taken over by PE sellers

Use price action entries like U patterns and base violations at the time of entering

Use 5 min tf candles for confirmations

 Follow below entry/exit criteria

1. After first breakout candle enter with 50% capital of your entire capital
2. if price stays sideways for next half n hr without making any OI changes be with same amt
3. If price takes reversal and breaks days high and OI is keep building in same direction with fresh
up move add rest 50% capital

4. If found price sideways and OI start reversing now if already entered keep

a. hedge of approx. half price ( eg. with 100 CE buy of ATM keep OTM CE sell near 40-50rs)
b. if price goes below your sl and on future chart 5 min candle closes below it exit from all
positions
c. after much volatility finally when price will start moving in your direction you can remove
hedge
to get max benefits of one-way spike or lower hedge qty. for max benefits.
FEW REVERSAL PATTERNS
Nifty change in OI
BN change in oi
Bank nifty also have poc at bottom
Highest volumes at bottom