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Swing Trading with Trend Cycles and Open Interest

Future and Option

By kumar

The webinar will cover Trend Cycles Analysis for discovering hidden trends in a stock. It will also cover Option Chain Analysis for stocks that will finally equip you for taking swing trades.

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Identifying Support and Resistance by using simple price action for Swing Trading

Technical Analysis

By Harshil Gathani ( B.Com(H) , Chartered Accountant having more than 6.5 years of experience and CFA (U.S.A.) Level 2 candidate)

Identifying Support and Resistance by using simple price action for Swing Trading

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Learn Basics of Option Trading

Future and Option

By kumar

Learn Basics of Options Trading. Understand the Call and Put Options. Get an answer to why you should trade in Option.

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Very good course on Open Interest Analysis by Kumar Sir. Anyone who wants to start to learn OI analysis this could be the right course.

Amazing knowledge sharing by Kumar Sir for people who want to learn the practical approach to the option chain, open interest, trend cycles and VIX analysis.

You (Jaykishan Pamnani) did a great job teaching me what I needed to know in order to become a sound investor. I apreciate you so much and value everythng i have learned from you.

OI Analysis

What are the importance of option sellers?

The buildup of <a href="https://www.mainebolatha.in/2020/05/volume-vs-open-interest-how-and-what-about-futures-and-option-trading/" target="_blank">open interest</a> (OI) at certain option strikes or levels by the sellers is an important indicator. By looking at the strength of the OI build up one can analyze the strength or weakness of the scrip for the time being. It can also convey a strong message about the trend that scrip is following. What are the options? Instruments that facilitate the purchase or sale of an underlying equity or index like Reliance and Nifty, for a fixed price on a future date. A hedger typically buys a put option or sells a call option as the risk it faces is a fall in the prices of goods it sells. A speculator, on the other hand, takes on the risk that the hedger seeks to cover against by assuming a contrary position. If the hedger purchases a put option in the belief prices of an asset could correct, a speculator would sell that put to it. Or, if the hedger sells a call a speculator would buy it. <a href="https://www.mainebolatha.in/webinars/"><img alt="" src="https://www.mainebolatha.in/media/Blog/What%20are%20the%20importance%20of%20option%20sellers%3F/image/blogs-image/20200731_175816_0000.png" style="height:680px; width:680px" /></a> Are options similar to futures contracts? Yes, but, unlike futures, where a buyer or seller must pay an upfront margin to trade and can be exposed to unlimited profits and losses, an option buyer pays a premium to buy a call or put and the premium is the maximum he can lose. His gains could be unlimited. On the other hand, an option seller makes a limited profit as his maximum gain is limited to the premium received from a call or put buyer while losses could be unlimited unless a stop loss is placed. How does an options seller’s positions help understand resistances and supports? A call option buyer makes a profit when an underlying expires or trades above the strike purchased plus the premium paid. It means he is bullish. If his call is correct he makes money. Who makes loses? A call <a href="https://www.mainebolatha.in/2020/04/why-option-sellers-make-money-the-mathematics-behind-it/">seller</a> who is his counter-party to the trade. The call seller makes a profit only if an underlying trades below the strike sold plus the premium he receives. Similarly, a put buyer makes a profit if an underlying falls below the strike purchased minus premium paid by him. He is bearish. If his call is correct, he makes money from the counter-party who has sold him the put, being bullish. The put seller gains only if the underlying trades above the strike sold minus the premium received from the put buyer. This leads to the following relative situation: a call buyer is bullish, a call seller is bearish; a put buyer is bearish, a put seller is bullish. Since the options seller receives the premium and faces unlimited risk, he tends to be better informed and more well-heeled than options buyers. He may also have sold options against underlying stock he owns or as a hedge against his futures positions. Thus, his creating significant open interest – having an open sell position — is indicative of the price level at which an index or stock can face resistance or receive support during a contract’s life. The stock tends to respect these price levels where OI is large. The levels can shift if the price breaks out. Also, option sellers hedge themselves against losses by charging higher premiums in cases where a stock tends to be more volatile. Option selling is most profitable when implied volatility (IVs) peak as a fall in IVs reduces an option’s price or premium, to the seller’s benefit. <img alt="" src="https://www.mainebolatha.in/media/Blog/What%20are%20the%20importance%20of%20option%20sellers%3F/image/feature-image/open-interest-nifty.jpg" /> In the above image, Nifty options on futures expiring on Aug 27, 2020 show highest call OI at 11200 strike and highest put concentration at 11000 strike. So, for now, the range of underlying Nifty is at 11000-11200. Is trading in options risky? There is always a risk involved when you trade in the share market. So, you need to be managed your risk with your money and discipline. Trading derivatives usually have much more risk than trading in the cash segment. Thus, it is advisable to trade in this segment if and only if your well informed about the risk involved in this. <gdiv></gdiv>

The buildup of open interest (OI) at certain option strikes or levels by the sellers is an important indicator. By looking at the strength of the OI …

Bank Nifty & Nifty Analysis

Nifty and Bank Nifty Analysis for 1st September 2020

Nifty opened positive, but failed to surpass the 11,800 mark and fell sharply towards the 11,300 level. It corrected more than 450 points from its in…

Bank Nifty & Nifty Analysis

Bank Nifty and Nifty Analysis for 21st May 2021

Let’s check the data and do the analysis for Bank Nifty and Nifty for 21st May 2021 based on Open Interest, Change in OI, PCR, Max Pain, and Trend Cy…

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Future and Option

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