Showing posts with label Options Trading. Show all posts
Showing posts with label Options Trading. Show all posts

Thursday, April 28, 2011

Nifty in Coming Days

Here is the analysis of Nifty in coming days after today's expiry.
On the Options front we can see lot of unwinding happened at 5800 and 5900 PUTS in April Series. Going forward to May series Traders made positions at  5700 ,5600 PUTS means in coming days market might reach these levels on Downside  with Huge OI at ,5600 PE  levels means we have Strong Support at 5600 in coming days  and  on the Upside we have 5800 ,5900,6000 Call Writings, With huge OI at 6000 CE levels means 6000 will act as Strong Resistance for the next week

Sunday, January 2, 2011

Market Direction in the New Year

Markets went into New year in good move. Nifty started 2010 at 5200 and ended at 6134 primarily because of global recovery and its impact on domestic recovery (consumption,manufacturing,imports etc..) and Strong FII flows into EM's which gave an 18% Return.

Nifty Started Jan Option Series with a Good move on  Friday. A Lot of PUT Writing Happening at 6000 Levels and can safely say for now that 6000 is good support for the upmove which  started from last week.

Good amount of CALL Writing also happened at 6300 levels which clearly acts as resistance for now. Also on 31st December PCR value is 1.29 for Index Options which indicates a lot of PUT writing happening when compared to CALL writing and NIFTY is in upmove atleast in the near term say for the next 1-2 Weeks.

Another interesting thing in the current series is NIFTY Rollover seen at 61.2 % which is very low compared to previous month of  75 % and rollover numbers say that not many participants are taking the positions which they had in December. But overall JAN Market wide rollover is at 84.5% compared with 85.5% in DEC Rollover and that looks like a good sentiment in contrast to Index Rollover positions.

Once the inflation numbers comes up next week and if that is in uncomfortable range then RBI will be going for Rate Hike which might hamper the sentiment on the street.

Call writing is a branch of options trading strategy involving the selling of call options to earn premiums.
Put writing is a family of options trading strategies that involve the selling of put options to earn premiums.

Wednesday, November 17, 2010

Whats Ahead for Markets from Options Data

Concerns of Debt Crisis in Ireland along with expectations of a Rate hike in China in coming days(might be this week) prompted investors across the market to liquidate there positions and looking  for safer assets.

Irish banks have there own problem of debt caused by the housing bubble and similar is the case with portugal. Even EU and IMF are trying for bailout but markets are concerned that the problems might be spread to other peripharel countries.

Nifty Shed 132 points and settled at very crucial support point of 5980 . On the Equity Side we have
FII 16-Nov-2010 3157.02 3353.71 -196.69  
DII 16-Nov-2010 1542.54 1092.95 449.59
FII were Net Sellers and DII were Net Buyers.
On the other Side if we see the options Data where all the action happens moreover most of the action over there is done by FII's.
  • Nifty call options added 57.75 lakh shares in open interest whereas put options shed 4.00 lakh shares in open interest.

Options Data on 16-10-2010

There is lot CALL Writing happened at 6000 Levels with increase of  Open Interest of 27Lakhs meaning it will take RESISTANCE at these levels in coming days and also OI got increased for 6100 and 6200 means in coming days it will be tough to reach those positions.

In the PUT Side we have increase of OI at 5900 with Put Writing seen at 5900 and 5800 coupled with increase in OI expecting market not to go down and Taking a SUPPORT at these levels, though 6000 PUT writing happened many positions were closed as can be seen with decrease in OI of 8 Lakhs,similarly 6100 PUT and 6200 PUT had seen Decrease in OI .That means many PUT Writers closed there positions expecting that market might head south and there by limiting there loses.

Similarly we have seen Lot of CALL Writing at 6100,6200 meaning thatWriters are not expecting to go above in coming days...

Looks like it might Trade in 5900+ to 6100 in coming days

Sunday, May 30, 2010

Bulls ‘short’ on Sesa Goa as they see limited upside: Is it True?

 I was reading this news article on friday morning which came in 
since thursday is expiry day one can expect there will be some amount of volatilty in stocks..but what made me intresting to spend some time on this is i like sesa goa very much coz there is lot of volatility in this stock...when ever there is ba of news of economy going slow or demand from china is reduced this stock will tank and when good news comes in the form of economy growing ,more demand from china or any other news..this will rise rapidly. These economic times very reporting that
Shares of Sesa Goa rose sharply on Thursday on the back of short-covering, but traders used this pullback to build short positions on the stock, as they feel the upside is capped

See the options data on sesa Goa on Thursday one can clearly see that 320 put has huge open interest that clearly indicates the down side is limited and the article on Thursday says upside is limited Thursday it ended at 337 . Since there is huge built up on 320 put it means the support is at 320 and not the resistance 

 Now see this data on Friday 320 Put as has almost same OI and other out of the money PUT are also started to rise . Guess what happened on Friday ..Sesa Goa had highest amount of % increase in List A Stocks ..10% rise in a single to check for sesa-goa price on friday
  now do u call this as Upside Limit ? Still unable to believe economic times reporting like that. I have a feeling that i might be a paid news from brokerages .

Thursday, May 13, 2010

Volatility Ahead with High OI and Volumes

 While i was looking at Open Interest in options  on NIFTY was bit surprised by seeing the volume of futures increased in last few days ,average volume in April is around 5 Lakh contracts and now we are trading above that..will see how it goes till Volatility index came of from lows..we might expect more volumes in coming days.

Date Index Futures
No. of contracts Turnover (Rs. cr.)
03-May-10 349631 8451.55
04-May-10 570849 13736.02
05-May-10 714820 16977.22
06-May-10 784241 18544.8
07-May-10 880349 20520.97
10-May-10 745870 17846.47
11-May-10 651926 15681.6

Todays NIFTY Futures contract details, we had a Price rise with increase in Open Interest in market with good volumes when compared to average of last month,,

581001 1492615.74 27492350 713300

Looks like its enough to judge the direction still i will do some more research and will come up with another post some time later

Here is how we interpret Open Interest with Volumes and Price Rise

Price  Volume Open Interest   Interpretation
Rising Rising Rising Market is Strong
Rising Falling Falling Market is Weakening
Falling Rising Rising Market is Weak
Falling Falling Falling Market is Strengthening

for me it looks markets are Strong for now..Lets compare them with Options Data
From the Graph we can that 5000 and 5100 put had a increase in OI..means Options Writers are writing the puts in expectation that market might go up.. that indicates for short term we are having support at those prices and also one can see that there is a  decrease in OI for 5300 Call ,mean option writers closed there positions in expectation of market going upwards..for now we have resistance at 5300

Even though global cues are weak we will where it heads in coming bet is towards going up :) will see

Friday, May 7, 2010

Greece is BlackSwan for Markets

I was bearish on NIFTY for a long time cause of variety of reasons like high P/E Ratio, High Interest Rates in near future,China Factor,Greece Problem etc Most of the factors are negative to Nifty  and i am still wondering why all of sudden  my view on market got changed after the last expiry and overnight i went from highly bearish to moderately bullish side.

I Guess it was  a big mistake of changing my stance, though i was bit bearish and bought 5100 put and sold 4800 put and was kind of gamble cause am selling a put (Unlimited Risk). Then comes the Black Swan in form of Greece and made the market to drag down. And i was bit lucky to have 5100 put and made good return in it and squared of it expecting the market will not go down much.But am wrong the market is dragging down daily and my position of 4900 sell is making losses and i will be bankrupt if it breaches 4900 before that i have to make a decision.

Here are some snippets at which i made certain decisions which i like to share over here
At position A in the above pic was Expiry time in April Series and my view on market got  changed from highly bearish to bullish coz the chart appeared to go up and earnings results of companies were Good and Greece was not there in my mind, cause Greece problem is made tougher by speculators who are expecting it to go bankrupt( will talk about this in another post) .Can see from A position that SMA crossed each other which was ignored by me somehow...regretting for it..anyway that's what happens to retail investors..they will be wrong in identifying the patterns..ok.. leave that for now,,

In the Fourth Rectangle is Williams indicator and highlighted region is marked in Black box with letter C , This was the time at which i was highly bearish cause the indicator touched 80+ for many days..that indicates its highly overbought and anytime it can sell off...its not that easy to predict sell off at least for me and only from historical data we can see it ..It was in overbought state for one month and for whole month of march to mid april i was bearish ,during that time market went up and i was made wrong.

Coming to the last rectangle marked with D which is the current week where we have slide in our market and Williams R is  in region 0 that shows its in oversold region and now again  for how long it will be that zone before there is bounce off and market going up 

I expect the market to come down a bit till 4900-4800 and then expect to go up..only in-case if Greece problem is halted for some time. Will get  some status on Greece by Monday Morning and hope peace prevails in market

Wednesday, May 5, 2010

Options Trading with Charts

yep finally made some progress on data collection and had some tough time in automating it but not done as of now..So here are some technicals of Todays Markets

below is the chart of nifty got from nse website

It all started from 2 pm IST and market started sliding
from then, initially i thought its a normal slide and when it went from 5220 to 5200 but once it breached 5200 there was some choppiness in the slide and it could not withhold the pressure of bears( or weak hands or SL got triggered) and blood was flowing for next 90 mins and even in last mins of trading also it didn't show any respite

We will see how Options were Traded and which holds the maximum open interest. Options Trading is generally used for hedging ,but there will be traders who take positions in expectation of making profit...(u know what 90% options traded will expire worthless )

Another important thing we need to see in options is Many people(includes myself until some time back) considered option buying is what determines the market direction but that notion of direction is wrong . why?
Its option writer (seller) is taking maximum risk and writing the option in return for the premium by expecting  that market will not close above strike price + premium in case of CALL and Strike Price - Premium for PUT option. Since option writers doesn't want to loose money(in fact who one wants to loose money? No one) .The Market direction is effectively decided by them. In case if any unwanted situation arises then writers may close there positions and might go for another strike price..This is how Open Interest Changes from Day to Day on Different Strike Prices

Here is what happened in Options on May 4th 2010

U can see from the below graph that there is good change in Open Interest in 5000 put ,5100 put and 5200 put that means market may settle anywhere between these values in coming days, Today there is Good change of Open Interest of 4800 put which indicates that lot of put writing happened at that strike price and market may reach that position and at expiry and we can say that market has Good support at 4800
5100 put has Good accumulation and one can see that 5100 is having some support for now

Coming the CALL side..we have good Open Interest (RED COLOR) in 5300 CALL which means there are many writers over there expeccting that market will not cross 5300 and that means Market has a near Term resistance of 5300. Good number of contracts were written for this lot which can be seen from change in open interest (GREEN COLOR)

The below Graph shows Contracts Traded Today and change in OPEN INTEREST

One can clearly see that IN THE MONEY PUTS were closed that lead negative change of OPEN INTEREST for 5200,5300,5400,which indicates that market may go down in coming days( This observation needs to be checked again). Reason why i made such a statement is why will option put buyers will close there IN THE MONEY PUTS.???.if they expect market to go down..they will  earn good return right?...Here comes..its not options buyer who wants to make money..its option writers who will make money...and now if market goes down ...IN THE MONEY positions will be huge loss...that's the reason they(Option Writers) closed there positions..(but anyway i will check this hypothesis again)
Wantedly  i didn't talk about the Blue Bars as i need some more clarity to understand it

P.S: I Made a honest observation from the Data Available at NSE india Site , Kindly forgive me if i made any wrong assumptions and analysis

Tuesday, April 20, 2010

Musings of Options Trading

Date :20-04-2010
Place: Office Desk

As the Readers(if any) know  that am jobless today i  kept my hands on options. It started from 8.45 am when i switched on my mini and started seeing the news channel. Gentlemen over there in white shirt and Red tie was telling that NIFTY will be in range bound... got to know that nifty now 5200 will be in range bound from 4900 to 5450 from this guy...hehe ....thats +_5%..any lame person who sees market movement can tell this..whats the big deal...this is how i thought after hearing that from a guy of well known brokerage firm..

Today is special day coz many people are coming in this news channel with a white shirt and red,black,green etc TIE and shouting in there microphone that market direction in shortterm will be decided by the RBI monetary policy which is going to come  later in the day...(by the time i wrote this..already they announced the policy , will talk on that later...) Now i also know this and closed all my positions in options the other day...coz anything can happen after the announcement .

BTW am watching CNBC news channel over web...and Udyain i guess he is the main reader.he looked very smart form my observation on his knowledge about different sectors and wide indepth analysis of questions he asks the speakers . i cam to know that rbi policy will be around 11.15 am ..and was watching the market trend as it approaches 11 ....and its unable to break 5225...for quite some i bought nifty 5200 put at 55 and waited for the rbi announcement....even though many speakers said that RBI will go for normal hike of 25 expectations of market...but some how i was not convinced by that..and was expecting RBI to make some tougher stand of going for 50 bps..coz of the inflation and run up of metal ,oil prices..some how it didn't happen..i guess RBI  were under different assumption(May be of uncertainty of monsoon and growth in private demand)..

The announcement of policy was taken in positive way and market reacted by jumping 30 points instantly and premium went to 40 rs am on loss of 750 rs.(MTM..Market to Market)....l was bit disspointed coz intially i placed order at 40 and later changed it to a bit disappointed coz i missed that oppourtinity..anyway its went to office..and from there..i did watch nifty for some time..and it was finding difficult to break 5250 and again i went for another lot nifty 5200 put for around 41 a matter of few started feeling the pressure and it dropped..a few points..and due to volatility premium again went back to 56 ..after drop of 20 i squared of here..for 56 rs and got a profit of 750 Rs and my second market at end of day is not going down..and struggling to go up or down..and i placed nifty 5300 call for 25 rs and got executed and later in day it went to 30..but still i didnt squared it off...

I hold 5200 put and 5300 call for now...just that i don't want to square 5200 for now..

hope market opens in Green in that i will square my call and again buy at lower price...

Thats all for now..c ya again later

PS: Office Desk is my IT Company Office Desk

Thursday, April 1, 2010

Musings of Options Trading

Date 30/03/2010

Even though i started doing option trading from some time back this is my first post where am doing post Morten of what i did on that day , since my memory is leaking this might act as proof of what i did .

few days ago i bought 5300 put when market was around 5300+ on last friday or monday at around 90. I got this brilliant idea of selling a put( which in fact is destructive idea) at 25 Rs. so when i did the same with icici they asked for margin of 16K for it though probability of loosing that position is very less since i am holding  5300 put . so after lot of thinking  went ahead and sold a put for which i got around 1000 Rs after brokerages . Now for the past two days market went my 5300 put went from 90 to 130 and i thought pf taking that  profit and renter again to buy 5300 put at in my desperation to square of 5300 put i closed at 125 Rs at around 3:10 PM expecting that market will not go down much from there since another 15 mins is there for market closing .To my utter surprise market fell in last 15 mins and premium went to 130+ Rs .I felt disseminated at my self for waiting till end of day . And the biggest surprise came after another 3 hrs and before US markets opened they released ADP report which gave a bad signal to markets and Europe almost drop 1% and dow and S&P dropping half a percentage and this started my worst nightmare of the year which made me to write this post. Problem is i am having naked 5000 put which can go completely wrong if markets go down..and i don't have a 5300 protection ,so for whole night i was praying that market (nse) should not open in down...and my prayers were answered for now...I feel am lucky to survive for today Will see from where i will head and ob markets head