Dear friends,
I would like to share with you an idea which i have just discovered and would like all of you to test it and offer your vaulable comments.
Open ODIN and select a scrip. Say ICICIBANK. Suppose it is trading at 640. Now we want to see if this scrip is about to make a move or not. So we open the ATM and just OTM options , both call and put for this scrip, say 640 CA, 660 CA 680 CA, 640 PA, 620 PA and 600 PA.
The premium of equidistant strikes should be almost the same. If not, the higher premium shows the likely direction.
Now create a new column with a new formula "Buyers/Sellers" and the formula will be Total Bids/Total Offers. If the result is > 1 then we get to know that there is buying pressure and if < 1 then there is selling pressure. We will now notice that there are significantly high B/S ratios at particular strikes on one side ( call or put ). This give the likely direction and the approx target.
Please test this and ofer your valuable comments.
Thank you.
I would like to share with you an idea which i have just discovered and would like all of you to test it and offer your vaulable comments.
Open ODIN and select a scrip. Say ICICIBANK. Suppose it is trading at 640. Now we want to see if this scrip is about to make a move or not. So we open the ATM and just OTM options , both call and put for this scrip, say 640 CA, 660 CA 680 CA, 640 PA, 620 PA and 600 PA.
The premium of equidistant strikes should be almost the same. If not, the higher premium shows the likely direction.
Now create a new column with a new formula "Buyers/Sellers" and the formula will be Total Bids/Total Offers. If the result is > 1 then we get to know that there is buying pressure and if < 1 then there is selling pressure. We will now notice that there are significantly high B/S ratios at particular strikes on one side ( call or put ). This give the likely direction and the approx target.
Please test this and ofer your valuable comments.
Thank you.