UNITED STATES OF BANKNIFTY

Sure. Let's just take the case of DELTA and it's effect on option price.

To begin with, delta is nothing but determining the numerical premium value of an option with respect to movement in the particular scrip. Let's just keep the rules simple:

-- If the DELTA reaches around 75 to 85 to 100. That particular option contract will start behaving like FUTURES contract with respect to movement in scrip. This happens mainly in the case of bigger ITM options only. That is why ITM options move so fast and are in complete sync with the price movement of a particular scrip.

-- Far and distant OTM options will always have very less DELTA value. Obviously, their value will change less with respect to change in price of scrip. That is why OTM options in banknifty are like gambling and lottery. If you go right, you may win big. But if you go wrong, you may lose complete premium. I never prefer such kind of trading. A responsible trader should not indulge in gambling kind of trading. Most of the times, OTM options end in big ZERO. They are usually the bread and butter of option writers or option sellers. Thanks

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Yes...Totally agree...thank you sir
 
Coming back to your query regarding interaction between "executing big aggressive orders" and "role of Greeks" ....

I will be frank with you, banknifty and it's contracts are just TOO BIG an instrument to be impacted by big aggressive orders. Yes, initiating big aggressive orders can surely impact penny stocks or other illiquid scrips but surely not something as huge as banknifty FNO contracts. In order to do that, we need to be as big as FII or DII. Yes, there are days when the price of different banknifty weekly option contracts look abnormally high or low. But these tactics cannot hold the artificial price level for too long. Option Greeks will surely come into play to alter the price of that contract.

But yes, I have myself witnessed some big orders affecting penny stocks. It shouldn't come as a surprise because we all know that penny stocks are highly manipulated.

Anyway, to put it in short, option greeks will surely play it's part in determining value of various option contracts. In the longer run, they usually will not get affected by the heavy buy or sell orders.

Also, to add one more thing, one small hint or trick to determine when the big move is about to come is that just before a big move (in banknifty calls or puts), the spread of those calls (if in case banknifty is about to jump) or puts (if in case banknifty is about to slip) will start shrinking all of a sudden. That means that the difference between buyer's bid and seller's bid will start to diminish. And when they almost reach very near to each other, then you will suddenly notice that the price of that particular option contract will start jumping abruptly or fall at a quick pace.

Disclaimer: This forum is meant for educational purposes only.
Wow...i really got big clarity now...thank you very much sir for your insights...i was struck with order flow analysis and i got big time question with greeks interacting with order flow.. now i understand where it plays and where not... // **BIG THUMBS UP**//
 

Top_Massage

Well-Known Member
Sir further adding...is there any broker or any service providers giving LEVEL 2 Data and Time and Sales data?
Sorry, I have always been associated with just one broker since the beginning of my trading career i.e. Zerodha. I doubt they provide any such data. Thanks

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Top_Massage

Well-Known Member
Alright folks .. I can understand that it must have been a volatile zig zag ride for traders ... but it's pretty common for monthly expiry days ....

Anyway, I made one FAILED attempt today. Tried making money through PUTS when banknifty was around 31420 and kept stop loss at 31500 spot ... I was hoping for correction. But I decided to exit almost flat with negligible profit as it really was a volatile session ... it was like - 50 points up within one minute and 40 points down next minute ...

Option premiums started correcting post 2 PM ... Hence, I decided to completely ignore today's session after one failed attempt ...

Moving forward, it seems banknifty has now shifted to higher broad range of 31000 and 31500 ... Tomorrow is the start of fresh monthly expiry and obviously, it is the week prior to budget ... Hence, we can expect a lot of action ....

On surpassing and staying above 31500 (+ / - 50 points) for long enough, we go up ...

Breaching below 31000 (+ / - 50 points) and staying below it for long enough, we may slip again ...

Choose very very wisely ... take care of premium erosion each and every day .... try to buy options when the premiums are least for the day ... best of luck


Disclaimer: This forum is meant for educational purposes only.
 

Top_Massage

Well-Known Member
Banknifty is currently wondering within a NO TRADE ZONE ... it's nothing but meant for option erosion activity .... It will have to break the shackles in order to produce a meaningful movement ...

Disclaimer: This forum is meant for educational purposes only.
 

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