An options trade needs 3 key points .
Direction,duration and extent of the move.Price action can give you the first and last .The middle one is decided by the market and the prevailing scenario.
Lets look at some of my short duration (1-2 days) Options trades.Let me mention 2 of them here.
A- A big down move.
B-A retracement.If you need you can draw a FIB retracement here.
D.next wave of downmove
E-Higher swing low.
F-Breakout failure.Look at volume.Thats where I buy 5000 PE .I am not a hedging guy as I believe in what I do..
I get reward for my decision next day and I comeout.
2nd one goes here.
On 16th Nifty takes support at 5000 ,a Big round Number.Bhalloos Hit back at5100 odd levels and price comes back to 5000 and takes support again at 5000 and then makes a false breakout mentioned in the above post.This signifies that we are looking for next lower level.4900 and then 4800.
Now invariably there will be a furiuos battle at 5000 as bulls know if they let bhalloos break that level ,they will be in serious trouble.Lets watch.
Nifty breaks 5000 with a big shaven bar.Bulls fight with huge volume.A hammer.But hammer closes below the low of breakout bar means Bhaloos are :clap:
Now once the low of that hammer is broken ,I will assure you next support is only at 4800.On break of the low of that hammer,I go for both 4900 and 4800 PE risking 20% of my premium. Bulls still make tiny hammers but frisked away by bhalloo's immediately.I get may day labour charges on the same day as well for carrying those positions for next day.I do all these despite of my other heavy comittments as these type markets we do not get every day/week/month