NIFTY Options Trading by RAJ

OK Here it goes with the VOLT Chart...

One more important indicator to watch out - VOLT Trendline Chart

I am not expert still in the VOLT Trendline charts. but I have been observing the charts. I have included in the OAT tool so that we can learn and make some useful interpretations.

How to Read the VOLT Trend line Charts?

There are threee lines
Green Line - Green line on TOP indicates Bullish
Red Line - Red Line on Top indicates Bearish
White Line - Overall Trend line - This is what is most important and we have to analyse the patterns.
Look at where the Red Line and the Green line meet - That is the Reversal point Or the Breakout point

Some of the obvious patterns you can remember for the White lines

A pattern in the form of a Tick mark and the Green line is above the Red line - Extremely bullish pattern - So the traders are willing to buy the Options at higher premium

Reverse (Mirror image) of a Tick mark - Bearish Trend - Traders are betting more on the downside and so the VOLT will be high on the Downside strikes.

so with the above knowledge - Let us look at some of the Key indices and stocks

NIFTY - Meeting point is 5650. So more downside is left. For the time being it is a SELL on HIGH because the Trend line is a Diagonal line. No sign of Bullishness till 6000

SBIN - It is vertical mirror image of a Tick mark. The meeting point is 1625. so SBIN is definite sell on High near the Positional pivot of 1704.

BANKNIFTY - No meeting points but the direction Bearish

INFY - This one is interesting. The meeting point is 3100. But the Trend line is not a Tick mark and so beyond 3100, i think it is a SELL. The VOLT is FLAT till 2800. so the downward journey might stop till 2800 for 300 points - 10%. So people might try selling INFY near the 3100 mark for targets of 2800. Beyond 2800 since the VOLT is HIGH that means traders have already SHORT the 2700, 2600 series to eat premiums. Right now you cannot expect beyond 2800 on the downside...

So try your own stocks and see how you can interpret those VOLT charts... Using VOLT Trendline charts is another KISS method. No complicated stuff needed. Just see the Trendlines and take some cool Positional calls. This is defiitely not for Intraday.

Suggestion or Tip : End of the day, Take a snapshot of the VOLT Chart in word document and see where the market moved the next day. See if your predictions are correct.


Those who want to See the Tick Mark... Look at the VOLT chart for the FINANTECH stock. You will see a BIG White Tick Mark -- It is Extremely bullish till 240. After 240 it is FLAT.

In fact SBI makes BANKNIFTY to dance to its tune.Your VIX charts prove that.

Dear Raj,

Thanks Raj for the new version.
I am learning options from you .

And my heart felt thanks for the excellent tool.

I have few observations with version 1.1.
In the options chain section PE - the volume is not correctly calculated.
The volume for 5400 put is getting displayed as 17.

As per max COI - it is a buy.
Since 5400 PE > 6100 CE.

But as per the over all COI ie long build,long unwind,short build and short unwind - it is again a "Strong bear".

The signal generated is based on the value "L43" which is based upon the Over all COI.

So strong bear,weak bear,strong bull and weak bull are calculated based upon the over all COI and not the MAX COI.

So which one to choose for entry ?

I will check again tomorrow.
Regarding the levels - floor pivots are excellent where one could expect the turning points or important fib levels.

Note:- expecting more on strength to trade thread.

Yes You are right JK.

Now we have five signals.
1. Based on Overall COI - WEAK BEAR (Weekly) - Based on the Cell L43
2. MAX COI - Buy (Same as Intraday)
3. MAX OI - SELL (Same as Weekly)
4. Sum of OI - BUY (Monthly)
5. Overall COI - SELL (Weekly)

1 and 5 are the same - In (1) we also find out whether it is a WEAK or STRONG based on the number of strikes with "BEAR" OR "BULL". So I think (1) should be used for Positional and not Intraday.

I understand it would be confusing with so many signals

Anyway from the above it is clear that the
Intraday - BUY (based on 2)
Weekly - SELL (BAsed on 1, 3 and 5)
Monthly - BUY (Based on 4)

The only issue is for Intraday, how do we find if it is a "WEAK" or "STRONG" trend.

If any of you have any suggestions, please let me know so that we can incorporate...

Dear Raj and Friends,

I guess Certain FII statistics will be useful.
As on date they have close to 6 lakh short positions in over all index position.
The bad news is they have just not even reached their half way mark of their full selling.
During the previous low their net

For the continuous 8 days Nifty fell 460 points.

And FII's are put buyers and 63.9% of over all put buyers of the index.
So markets fell FII's accumulated puts.

They are calender spread in the Calls and just 28.8% of calls.
Rest put short are bear put spread.
The above two are my assumptions based on the data.

So Smart money have purchased puts as markets fell in the direction of the bearish trend than writing calls.

I guess if we could infer that smart money is accumulating calls/puts or index then we could identify the stronger trend.

Need more inputs from fellow friends.

TIA.

I maintain a ledger of FII Index OI.

My observations from it:

FII accumulated longs in the entire month of July. However, something clicked. And since 25th July (expiry) they have been squaring off which is exactly when the fall started. Hence, FII are bullish, they didn't start the fall but were only reacting. GOI screwed up.

They have not initiated the fall. But may start to, which will take Nf to decent lows.

This also solves the puzzle of such high levels of NF premium inspite of a sharp fall. FIIs had been holding Index futures and were hopeful and didn't want to get out.

FIIs have not completely squared-up and are still holding decent amount of long positions (around 117K units in OI).

Upon plotting the avg price of FII, it shows that the price is near the lower levels where it is likely to find support. So, with a trigger FIIs are likely to start collecting longs again.

I also plot the limits of FII OI, it shows that the FII OI holding is near the lower side. It still has some way to go down. So it is possible the FII square off a little more.

It appears as though a strong move is unlikely. Consolidation is on the cards. But you never know. One news can change all estimates.

So its confirmed that ending diagonal pattern did exist and Nifty SPOT made a low of 5636.Ending diagonal patterns are often located in fifth wave position and their internal waves are made up of 3-3-3-3-3 sub waves.

So what do these sub-waves indicate ?? Minor upside with mainly downward momentum ??

Well these sub-waves are very difficult to predicate.However within these subwaves one of the wave has to be extended one i.e it has to go beyond 1.618 fib level.Now none of them has been extended which means current way will be extended one i.e more pain left.

Every upmove should be taken as an opportunity to go Short.We should not be thinking that market has lost lot and now it will start moving up.No.There's still lot of pain left in the market.As stated earlier we are in big C wave and its movement is very fast.Some short covering might take it up by couple of points but thats an opportunity to go Short.

If anybody is sceptical of going Short and still wants to go Long then on the basis of trend best stock would be Hexaware.This stocks seems to be in third wave which is very very powerful.Take risk on your own as its just recommendation.