Ms Jyoti Budhiya, Finding Hidden Divergence in Option Chain, Technicals and Derivatives Analyst

2nd half of August 1986, started from BSE ring- call outcry. Belongs to broking family.
Third Generation in broking
Still a learner, prefers to teach what she's learned from the market.

Conservative trader.
Derivatives and commodities.
• Options still a lagging subject
• Basics of Option Chain and then go ahead

Option Chain
1. To Find Directional Trade and
2. To Understand Price Action.

Why to understand option chain?

1. Understanding Option Chain

2. Open Interest in Options Chain
3. Support and Resistance Using Open Interest of Option Chain
4. Range Shifting of Support and Resistance
5. Finding Hidden Divergence in Options Chain

Important Points in Option Chain

• Strike Price
• Liquidity in Options as Liquidity plays a major role in Stock Options for Entry and Exit of
Trade
• Highest Call Open Interest
• Highest Put Option Interest
• OTM,ATM, ITM Options
• Greeks(For Designing Strategies)
OPEN INTEREST

HCOI= Highest Call Open Interest- Acts as resistance

HPOI= Highest Put Open Interest- Acts as support.

Things to check:

1. Futures OI
2. Options OI

o Short Buildup in Futures OI

o HCOI as resistance

If Gap up and OH is same(minute difference)

Top Secret:
The difference between HCOI and HPOI if 10% or more then works beautifully:

• If we get a trend.
• When there is a short buildup in futures
• When there's a reversal in charts

Or when you are near HCOI and you see the prices are unable to move upside, you are at resistance
and if you are buying a put and if there's a probability that the prices might fall by 10% or more
maybe not in a day but maybe in a week or 10 days.

Similarly if we're at HPOI then we should get a reversal. If we dont get a reversal, dont buy the call.

Gapup + OH
GapDown+ OL

On reversal of underlying price near or from HPOI we can create Bullish Strategy with Stop loss.

ITM puts getting added and calls getting reduced

Futures OI getting short buildup + HCOI= Short with small SL(acc to zone)
Future OI getting long buildup + HPOI = Long with small SL(acc to zone)