Trend Analysis :

 OI change in Open Interest.

 Here major volume contracts are added. And this is the best tool to predict.
 Trend of market.
 Support & resistance of the market
 Range of the market.

 In options trading; 1. Market trend , 2. Market Range, 3. Market volatility are the three important parts.
 While trading in options technical analysis & option chain are very important.
 Option is a game of speculations. And speculation means intraday trading. So for intraday trading quick momentum
trend can be caught by short duration technical charts & volume support by change in open interest.
 Option is mostly popular for options writing. So your trading style positional trading with option selling strategies &
intraday trading with option buying strategies are the ideal portfolio formats.
 So into options trading following days are ideal for the trading : Monday, Tuesday, Wednesday & Thursday. Friday is
not considered to be the ideal trading day.
 For intraday, identifying trend will increase the chances of our profitability.


Most Important Points in OI :

 Long Build Up = Option Buyers Data by NSE OI Chain
 Unwinding = Options buyers square off their positions data by NSE Option Chain.
 Short Build Up = Here option sellers create big positions.
 Short Covering = Here short sellers close their positions.
 We can use any derivatives data site (opstra, nifty traders, etc.)

Long Build Up :
 We will compare near OTM options both call & put.
 If any side premium is in green then trend is clear. Call Side Green = Extreme Bullish. Put side
green = Extreme bearish.
 We use this to enter the trade.
 Long buildup data can be either extreme bearish or extreme bullish.


Unwinding :
Where long buyers are booking profit. Here it means that call buyers are booking profit on
resistance, this doesn’t mean that from here on out the trend is going to be bearish; unwinding
means that bull run is over for now and new trand is yet to be established.
 Short Build Up :
 This is the most important tool because it helps to identify trend/ support/ resistance.
 Here option sellers are
 If call writers are higher than 70% than put writers then trend is extremely bearish.
 If put writers are higher than 70% than call writers then the trend is extremely bullish.
 If both the bars are near about equal then the trend is rangebound.

Short Covering :
Short covering means sellers are closing their positions & this data is useful for finding out extreme
bullish or extreme bearish trend.
Call Short Covering : This means extreme bullish trend.
Put Short Covering : This means extreme bearish trend.
And this data reflects on change in OI lower bars.

How To Identify A Trend? Step Wise :

 Technical Analysis on chart.
 Long build up data.
 Option Writing Data (Bars)

General Notes :

 After your target is hit, ALWAYS trail your stop loss for bigger profits.
 Your losses should have a limit, profits should not.
 Technical and data must always co-relate.
 Technical analysis > Option Chain & OI data > if they co – relate then we think about strategy.
 If VIX is strong, it will shoot the premiums on the upper side.
 After every rally, there is consolidation.
 Change in OI is the key data for placing strategies/ intraday trades.
 Always focus on raw materials company instead of finished goods company for building a strong portfolio.
 Iron Fly & Back spreads can be installed on USDINR.
 To master any strategy one has to place that specific strategy at least 60 times to get a hang of it.
 For equity swing trading, you can see the short covering data in OI CHANGE and manage your stoplosses
accordingly.
 You can add the ATM premiums for equity stocks who have derivatives to understand how many points
movement the is supposed to give!

 ANALYSIS Of The Market Step By Step:
 Technical Chart.
 NSE Option Chain to find out long buildup data & long buildup data is important for finding
extreme bullish or extreme bearish trend.
 Checking option writing data on bars (opstra/ nifty trader) & option selling data is imp for :
a) finding support and resistances. b) finding market range. c) trend of the market.

Doubts :

1. Change in OI lower bars.

General Notes :

1. Trendline & horizontal levels are your best friends.

2. Always have bigger spreads (big range of BEP)
3. Short straddle is a better strategy except on Friday.
4. Today (15-12-22 Expiry day) on nifty the data was showing bearish range bound
Nifty Analysis = Spot is 18570, so on long buildup data call & put premiums both are into red so no extreme trend is
detected. On short buildup data 18600 Call side highest data of short selling. So for the day 18600 remains the strong
resistance. On 18550 level call & put data is almost equal so we are assuming that 18550 level is best for call put selling.
5. In further option strategies we are going to use 5 important basic terminologies; a) deep analysis of market trend. b)
Delta c) Theta d) Strike price selection as per the market trend e) hedging legs strike price selection.
6. Try not to trade between 1 to 2pm on any day because of global market opening and hence volatility in our markets
are very high.
7.

Option Greeks :-
Option premiums prices are derived from these two points.
1. Volatility.
2. Option Greeks

Option greeks decides premium expected movement. So into that majorly out of 4 greeks, visible
greeks are theta and delta. So for every option strategy either we use delta or theta or combiningly
both the greeks.

a. Delta : Delta decides directional movement of option premium. Maximum delta is

considered as 1. Higher the premium means higher the delta. And lower the premium means
lower the delta.
 Delta is best tool for directional trading strategies. For quick profits delta is important. SO delta can
be used in option buying as well as option selling strategies. Ideally ATM options or near ITM options
or near OTM options are best for delta benefit strategies.

Ex : Nifty is trading at 18550

18500 CE --------- 40rs (premium)
18550 CE --------- 30rs (premium)
18600 CE --------- 10rs (premium)

Ideally ATM options have high liquidity & good to buy or sell. So mostly in our all option trading
strategies either we select near ITM options or ATM options or near OTM options for option buying/
selling strategies.

General Notes :

1. If FED and banks increase their rates, then this is a very strong signal for currency. Whenever these guys increase
their rates then currency will go bullish. And if they decrease their rates then currency will go bearish. Directly
proportional.
2. Demand & supply should always be at 1:1 ratio.
3. On expiry day data is supreme and technical chart doesn’t give us accurate analysis because on expiry market is a
game of speculation and hence technical does not work properly with respect to data.
4. For best theta + delta benefit near ITM or ATM strike is the BEST.
5. Ideal time for watching OI DATA is @9:45am
6. In a weak market when a stock is performing decently, that means the stock is STRONG.
7. DO NOT INCREASE UNNECCASARY FUNDS IN SMALL & MID CAP STOCKS.
8.

b. Theta : Theta is time value of ATM, near OTM & near ITM carries highest theta. Time decay
is applicable on daily and positional basis. It means theta is the option Greek where if days to
expiry decreases then theta increases. For eg: on Friday 18300 ATM option theta is -10 &
premium is 130 so this theta on Monday amount will be doubled; it means that theta will be
16. On Tuesday that same theta will be 32, on Wednesday 64 & on expiry day (Thursday)
that theta will be 100.

Option Advanced Strategy :

In options advanced there are 4 major strategies;

1. Ladder
2. Advanced Trending Iron Fly
3. Calendar Spreads
4. Front & Back Spreads
 1. Ladder :
 Ladder is the advanced version of butterfly strategy.
 This strategy can be used for intraday as well as positional.
 In this strategy margin required will be 30-40k.
 In this Strategy risk to reward is fantastic.

1.1 Bull Ladder & Bear Ladder : These are to be used either with call options or put options.

Bull Ladder (Bullish/ Extreme Bullish/ Bullish Rangebound)(Theta & Delta Benefit) =
 This strategy is best for positional.
 ATM or near ITM CE buy.
 Double lot Sell option strike of which we bought & select premium which covers 50% to 60%
cost of buying options premium.
 BEP in option buy.
 EG : Bank Nifty Spot is 43600
Here view is = Bullish/ Extreme Bullish
So ideal setup would be
43600 CE buy 1 lot
Half premium covered strike sell double lot 44200 CE
And in BEP 44400 CE Buy

In This strategy analysis we need to see :

1. Technical Analysis
2. Change in OI Data

Strategy Entry :
1. Risk To Reward
2. Strategy is either for intraday or positional
3. For NIFTY maximum set loss per lot should be 700-800rs
4. For BNF maximum set loss per lot should be 700-800rs

Profitability : It must be 1:2 or 1:3

Now the construction of this strategy is as follows :

1. Bullish Ladder =
 ATM CE buy 1 Lot
 OTM option CE sell 2 Lot & strike price (We have to select such option strike who’s premium
addition of 2 lots equals approx 60% to 70% of first premium)
Eg of above point : ATM option buying premium is 200 then I will sell the option which will cover
120-140 credit.
 Third leg is adjusted by BEP point & always buy breakeven point or option that’s inside the
Upper BEP.