Confused !!!

[Niranjanam]

DII are not allowed to work in FnO. may be some one can clarify.

I was not aware of this. Could not find any statistics of FnO by DII
Then the game is FII V/s Retail ?

 

[Somatung]

I am looking for some positional trades. So far I have tried only pure vanilla calls and puts. Decision making is purely based on Nifty chart. Thought of going for some spreads where I am not very confident of a directional move. So far I was not able make this OI data effectively. Nifty stalls and reverses at its own supports and resistances. OI shifts as it moves. Really wonder whether OI is worth monitoring during these kind of trades

What about value it as just an other source of information which can be implemented in the whole valuation of any script at current moments for the next trade?

Current moments valued on price action, may even with TA indicators and math levels?

Then using the current trading plan which has the implemented option strategy (purely or synthetic) and then you go.

Guess I have given enough hints now.

Good luck and take care / Dan

 

[umeshmandal]

Lately I have started some option analysis and have gone through many threads. Decisions are mostly made on the basis of OI analysis rather than charts, it seems. OI, Change in OI, PCR, Maximum pain etc are the major tools rather than the chart of underlying.

In my understanding the entire analysis depends on option writing. This is because Option writers are considered as players with deeper pockets who can move the markets. For example

if 8300PE has highest open interest, traders perceive it as important support for the time being.Keeping in view that most institutional investors write options rather than buy, the data helps to understand mood of ‘intelligent money’. Similarly if huge open interest is built for 8600 calls it will be seen as major resistance zone. If the expiry is near then the market may stay range bound between these two levels so that sellers can eat the premium. Am I right?

Later I stumbled upon this data related to FII ( Click to read). Surprisingly I found almost always FIIs are net option buyers. Most of the days they pay premium rather than collect it. They buy more contracts than they sell.I could not find the data related to DII. But I think they cant be different

If so the very basic assumption of Option analysis gets invalidated. Retail write more options than institutions.Then the Big boys plan could be different. that is to inflict maximum damage to retailers by moving price near or beyond these levels forcing them to buy back at higher prices.

I am just a beginner and struggling to understand the big picture. Option experts, Kindly guide.

I am a total novice in Options, so value my comment accordingly.
Refering to the highlighted portion : Is this because FII dont use Options for Profit but for Pure hedge against their Portfolio!???

 

[stock72]

I was not aware of this. Could not find any statistics of FnO by DII
Then the game is FII V/s Retail ?

This is the one I tried to say in my earlier post ..there is no game between FII vs retailers ..
The game is always between two groups where each group formed by a collection of FII,DII,HND etc ..

 

[TraderRavi]

DII are not allowed to work in FnO. may be some one can clarify.

yes DII not allowed in FNO , only equity.

 

[TradeJoker]

yes DII not allowed in FNO , only equity.

And retail FnO is 5%. So the game is between FII Vs FII ?

 

[jagankris]

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[jagankris]

I was not aware of this. Could not find any statistics of FnO by DII
Then the game is FII V/s Retail ?

yes DII not allowed in FNO , only equity.

And retail FnO is 5%. So the game is between FII Vs FII ?

DII is allowed to buy options/Futures - only in certain MF plans which has included derivatives for hedging.

Retail FNO is not 5%.
Retail - FNO is the sum equal of FII+Operators(Proprietory Trading - AKA Market makers)+DII.

Some times(Very Rarely) - The daily volume of FII + Prop Traders(Operators) +DII volume is <
Retail traders. - Example 7th August.

 

[lemondew]

Just saw. 1 lot nifty = 13331 + MTM of 1000 = 14500. He may get about 15 points OTM. Approx 375 Rs or about 2.5%. If all the FIIs only buy options the prices will go over the roofs and they wont be able to move the index enough to make any kind of profits.

Brokers/prop desk can write options without margins as they have security deposit. If you remove the margin out. Investment of 1000-1500Rs MTM can give about 375 Rs. which is a good return. The brokers also buys for FII/retail.

 

[vijayanscbe]

DII are not allowed to work in FnO. may be some one can clarify.

yes DII not allowed in FNO , only equity.

I am not sure whether DII is allowed or not. But logic for creating the FNO itself to hedge the equity holdings. If there is no FNO , then buying and selling stocks with huge volumes may move the market like roller coaster. To avoid this only FNO created and cap limits created for buying/selling stocks.

If FII had advantage of using FNO for hedging, why not DII ?