Trading Strategy using Options Open Interest
Hello friends, I am Vivek Bajaj, co-founder of Stockedge and elearnmarkets it is going to be another great episode because the guest who is going to join us has a market experience of 20 years when he started the nifty was 800, just imagine the rich experience he has! so today's topic is open interest in options and how to plot it in a graph and how to predict the market after that. So, friends, this is going to be great. This is going to be long as usual because face2face has less entertainment value but more learning so don't miss out, I will make the most of this opportunity and know everything from this person. So let's welcome our guest for today, Mr. Abhijit Pathak people who have been in the market for so long know you as AP. So I will also take the liberty and call you that. Your Twitter handle is famous and you are also a part of define edge so we will talk about the live market first and then we will talk about your background so let's share the screen and start, I think the market was cold today, so let us know if you were getting the same prediction I would request you to talk in Hindi because we will provide a transcript for people who know English the green line is for the 250 call and the red one is 17250 OY and suddenly the market started acting up after Russian news came up so Tuesday, Thursday, Wednesday, this was a 15 days chart if in put option OI is getting built up, it means someone has sold a put right? I mean that in the morning the nifty was 17420 and even it got 200 points less it stays static, you can see it at 11 am, 12 pm, and any other time it means the market is going to turn at 17250, yes yes, I understood a common question people ask is how do they get the real-time OI meaning that the moment it changes that is the problem with real time OI, I don't know about MCF because it is going to come up with such changes you can see the 1700 call out before it was 250 now it is 400 if you see then it was going to be a bear market, see the green line. For a long time, I can see that the Y of call is more than put, this means that the major resistance is decided by the 3 factors it is confusing so I plot in one call, it shows the progression of how it goes it is said that open interest is controlled by the bigger bulls, so the market will go according to the OI, which is one of its principles everyone's interpretation of the theory is different, sometimes they are in with bull market and sometimes bear market the interpretation was very different, so our objective is how to make that subjective viewpoint into objective anyone who is doing bank nifty and trading in the same, then they should know that if you are not doing open interests analysis then they are in darkness some people also make strategies on Fridays, so they get a benefit on Saturday and Sunday you gave a great analogy, I never thought about it like that people say that if you want to be big in the share market then you need to get bankrupted at least once, so are you one of those who stood up after getting bankrupted? bankrupt meaning that the account was all empty, but I was able to run the house. Yes I am sure you are wise so you won't put all your savings into one
you should make sure that you do not use all your money, you should have your liabilities and enough so that you can run your house in fact, I get so many DMs when the market is down, and most of them are bullish you should do it according to your position sizing and lay your feet according to the size of the blanket do it according to your possibilities, and all this looks very easy but it is difficult in the live market in IEOD, even if you are not near the terminal due to your work or business you should be able to handle it there are a few theoretical points, which are really important for the options trader, most of them go for option buying the second one is that there are no interim calls, if it is 2500 then all of the money will go at ones that's why it is very important to know if this is the moment of momentum and if it is going sideways if there is no momentum, then it is the biggest villain for long options let the time value come, the moment the time value is coming close it will get the moment to act this is the expiry from 27th-28th January, I am showing how the options chart works many people laugh when I tell them, especially people who do greeks. They think that it should not be plotted in a graph the options will not see such a lot of change just the way it is in the futures there will be a double bottom around 16850, after that call also made a double bottom then it started going up if the call is bearish then it is necessary that the put will also be bearish this hammer type position is a hammer touch that day it was very much visible, it was an all-time low in nifty in this put, you don't need to think about shorts, which is important I always go for weekly expiry, but this one is monthly expiry just because the nifty is 17600, I will take the call of 17250, it is very important to know that if you google it then you will get many answers, I also did the same there are some websites that can show you the candle levels there is no momentum in the market and then there is a sudden crash, which is not visible at ones at the same time, the put of 17600, it is also going up because the basic calculation of vix is options premium, which is not known by a lot of people some people only buy in one lot, if it goes down then they still hold it we should always go for multiple lots in options trading, at least 2. then your put becomes 0 in that situation even if it goes down it is my initial stop loss, I am not going to lose much but this is showing how it went bullish in that call this rectangle shows that there was a movement, but it does not show the moving average it did not follow up, so immediately you will see the chart of call before that, I only saw the candlestick chart because there was no software I have done another face2face on points and charts, he is also the owner of defineegde. I will provide the link below people ask how to track that, it should be done with the help of books and websites the thing with open interests is that it increases through put I haven't learned all this through someone, it is all self-learned through books, charts, and my observation and the way the nifty will go up, similarly the writing level will also go through the same when it is slow then the rise of the building is very fast when the open interests are like this then it can go anywhere, I tweeted this around 2 in bank nifty it does not happen like this, the option will go up I have given this a few years back, below 0.8 it is bearish, between 0.8 to 1.2 it is neutral in that support, it cannot go broad level, which is not applicable the last line is only a hint though it is a very powerful hint never talk about catching bottoms and tops in the morning when you see the put-call when everyone is down then you can see I always say that if you know what is not to be done then half battle is won this concept of open interest was introduced 6-8 months back, which was important and this is how it was interpreted when it comes to charts open interest was call plus put or call minus put it doesn't mean we will not trade according to that, we will trade around the price we will short the straddle or strangle, even that goes in the market you are able to do in stock option, so what are you going to say about that that time some news came around the open interests about some stakes
2022-03-02 22:17
