NIFTY Options Trading by RAJ

How do you use OAT tool?

  • For Intraday Naked Options trading

    Votes: 58 37.7%
  • For Intraday Pair trading of Options

    Votes: 27 17.5%
  • For Intraday Futures trading

    Votes: 18 11.7%
  • For Positional Naked Options trading

    Votes: 35 22.7%
  • For Positional Pair trading of options

    Votes: 29 18.8%
  • For Positional Futures trading

    Votes: 11 7.1%
  • To trade in Cash market

    Votes: 13 8.4%
  • Overall trading has improved with OAT

    Votes: 27 17.5%
  • Understanding of Options has improved with OAT

    Votes: 57 37.0%

  • Total voters
    154
  • Poll closed .

gmt900

Well-Known Member
#31
There is a formula to calculate the Option Pain. For US markets there are sites like OptionPain.com to calculate the MAX pain. For the Indian markets Yesterday I posted a link.

http://www.traderscockpit.com/?pageView=futures-and-options-chain-analysis

In that please look at the Bar chart given at the bottom.

Whichever bar has the lowest value (Total PE+CE) has the Maximum pain, which is at 5975. So you can expect this market to expire around 5975.

So if you have taken Naked calls above 5975, then better to close it now.

There are also Excel spreadsheets available. You can google to find out.

MAX Pain is another indicator for Option Trading. Like any other indicator this is not 100%. The MAX Pain could shift to 6100 also. But right now it is at 6000. So it should be used only as a Caution. It applies more during the expiry because when we have just 5 days left we cannot expect any magic in the last 5 days because normally the Market makers come and eat the premium.
Thanks for the detailed explanation. Got that.
 

healthraj

Well-Known Member
#33
Hello Raj

Nice thread, thanks for your efforts and sharing.



on this pair more than 90% of the value is from the calls, then why sell the pair?
if max pain is at 6000 then why sell the puts, something that is going to increase in value . . . as we go near 6000??

the RR will improve if we short only the call instead of pair . . .


:) Happy
First of all It is a risky call. So I agree that 90% of the value is from Calls. The whole idea is built on the MAX Pain - I mean market will move towards 6000 for Expiry.

What If the market moves towards 5975, Let us calculate the Prices for 6000CE and 6000PE - Assuming the Volatility does not increase. If the VOLT decreases then it would help our position.

So if the Market touches

6060 - Pair would become 91 (CE 79, PE 12) - Gain of 14 points
6030 - Pair would become 79 (CE 58, PE 21) - 26 points
6000 - Pair would become 74 (CE 41, PE 33) - 31 points
5975 - Pair would become 76 (CE 29, PE 47) -

What if the VOLT reduces to around 18 (CE now @ 22. [email protected])

At 6000, The pair would become - 64 (PE- 30, CE- 34)

Keep the Stop loss 6100 where the Price would become 116 - Ten points Stoploss.

For those who want 20 points stoploss, Keep it at 6110.
 

vssoma

Well-Known Member
#35
After moving to Options Chain, nowadays I don't look at any charts... Looking at Charts only makes the heart go fast and creates the FEAR syndrome. So after you have taken the position, Put the stoploss trade and go for a break for 30 minutes... Don't keep on looking at the Charts and the monitor :)
dear raj,
when u get time pls give some detailed explanation about the usage of option chain to take a trade or form a strategy in a simple manner like how to check for pain n OI ect.
 

healthraj

Well-Known Member
#36
Overall CHG in OI

CE @ -9.2 L
PE @ 19.15L.

If the CE volume does not Go Down, then it would be a concern for our Short positions. Because Too much Negative Values means the BEARs are letting the market GO UP.

CHG in OI @ 6100-6200

MAX OI @ 5900-6200

Still Favouring Bulls - No signs of Short Yet
 

healthraj

Well-Known Member
#38
@Raj

Max Pain for TECHM is coming at 1060 which is around 120-130 points below CMP so how to interpret it
As per my calculation the MAX Pain for TEHM for Jul-13 expiry is at 1120. So I am not sure how you are calculating the MAX Pain.

The MAX OI is also at 1000-1140, which is in line with 1120. May be today there was a breakout because TECHM now trading around 1180.

MAX CHG in OI @ 1140-1180.

So we have to see tomorrow what happens.

I may be wrong on MAX Pain calculation

Just to cross check, What are you getting for NIFTY as MAX Pain? As per my calculation it is at 6000.
 

healthraj

Well-Known Member
#39
Overall CHG in OI

11:00 AM
CE @ -9.2 L
PE @ 19.15L.
If the CE volume does not Go Down, then it would be a concern for our Short positions. Because Too much Negative Values means the BEARs are letting the market GO UP.
CHG in OI @ 6100-6200
MAX OI @ 5900-6200
Still Favouring Bulls - No signs of Short Yet

11:45 AM
CE @ -8.4 L - The Positions gone down by 60K
PE @ 19.25L - Up 10K.
So nothing much happening overall. But the CE squaring is paused or coming down.
 
#40
First of all It is a risky call. So I agree that 90% of the value is from Calls. The whole idea is built on the MAX Pain - I mean market will move towards 6000 for Expiry.

What If the market moves towards 5975, Let us calculate the Prices for 6000CE and 6000PE - Assuming the Volatility does not increase. If the VOLT decreases then it would help our position.

So if the Market touches

6060 - Pair would become 91 (CE 79, PE 12) - Gain of 14 points
6030 - Pair would become 79 (CE 58, PE 21) - 26 points
6000 - Pair would become 74 (CE 41, PE 33) - 31 points
5975 - Pair would become 76 (CE 29, PE 47) -

What if the VOLT reduces to around 18 (CE now @ 22. [email protected])

At 6000, The pair would become - 64 (PE- 30, CE- 34)

Keep the Stop loss 6100 where the Price would become 116 - Ten points Stoploss.

For those who want 20 points stoploss, Keep it at 6110.
Thanks Raj,
I am first time trading ur pair.
I short the pair 6000 CA & PU at 106.
Lets see....
 

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