iCharts Discussions

[Gemini]

Dear Sunil,

Hello. Yashrahul has been explaining well on the interpretation of the highest OI and chnage in OI. I have just added a pictorial view.

To recap: Highest OI level indicates possible support (highes put OI) region and resistance (highest call OI) region. For example, eod 11th Oct. indicates that 6100 is resistance and 5700 is support. (This is based on the observation that strong hands use options to "earn" premium paid by weak hands. As pointed out by Yash reducing premium with increasing OI indicates that "sellers" are eager to sell and hence buyer are able to get a good bargain !

Change in OI level indicates possible movement in coming days. 11th Oct data indicates that 6100 call OI is reducing and 6500 call OI is increasing. At the same time 6100 and 6200 put level are increasing. I will interpret the same as bulls are now getting stronger and expecting the market to move up (and may be eventually have new support and resistance levels as 6100 / 6500).


Overall, OI charts provides the view that there is larger qty of puts than call, indicating higher PCR and hence stronger bulls.

Hope, this is useful.

happy Trading.

[yashrahul]

IIP data comes in 0.6%,inflation comes in at a very high 6.46% and still the markets are not going to go down,it seems some aggressive put writers have started writing 6000 pe hence 6000 pe oi has added 10,57,350.

Put Writers have started writing nifty options which are too close,markets may open up very fast if these writers have to start unwinding their positions

[yashrahul]

Put Writers have started writing nifty options which are too close,markets may open up very fast on the downside if these put writers have to start unwinding their positions

[yashrahul]

It seems the strategy that is being applied today is "selling both 6000pe and 6200 ce, when nifty future is at 6138 (at 1.51 pm it is giving a total premium of 147 points minus the brokerage).

The above strategy is not a recommendation but for understanding from educative point of view, kindly ask the experts or follow their threads for trading.

I will again try to post the same at close to 3 pm for better understanding of erosion of premium when the market moves sideways(most of the premium has already eroded as it is 1.51 pm but still lets see,after all we are only trying to understand and not trading with this strategy)

[yashrahul]

it is 3.06 pm,nifty future is at 6137,6200 ce and 6000 pe total value is 142-143,it means the option value together has eroded close to 4-5 rupees in just one hour even after their individual value had already eroded by 10 % at 1.51 pm when i wrote my last post(even now at 3.10 pm one can counter check nifty spot is up by 14 points only at 6110 yet 6200 ce is trading at 80.20 or so (previous close 87.75) and worst is 6000 pe which is at 62.40 or so (previous close is 74.55).

For Tv anchors and others market remains flat for traders like us who already have carried positions like calls and puts in nifty options,even flat markets can cause losses.

[yashrahul]

in the last 15-20 mins the joint value of 6200 ce and 6000 pe has further eroded to 140-141,meaning of this is that those who have written 6200 ce and 6000 pe since 1.51 pm have already made 6 to 7 points.

this is for educative information only,please don't take any trade on this strategy as everyday is a new day in the markets and this strategy may not work like today,if taken for tomorrow.

[amitagg]

it is likely to work 'near resistance' for 2-3 days......of even after a 'break' for 2-3 days....... however, if near resistance risk of gap up or gap down unless closed intra-day.....it all depends...this is not sacrosant and selling options is risky.

[yashrahul]

Thanks amitagg,that is what i have been saying since afternoon,this strategy was mentioned only with the intention of eductaive purpose that even in a flat market the value of call and put gets eroded and i didn't find any other day better than today to explain the "EROSION OF CALL AND PUT PREMIUM IN A FLAT OR SIDEWAYS MARKET".

Selling of calls and puts is always risky and once more i would like to specify that i will never recommend such a trade.

[yashrahul]

14/10/2013

HIGHEST OPEN INTEREST IN PUT:5700PE =56,30,450

HIGHEST OPEN INTEREST IN CALL:6300 CE =45,21,200.

Note: we have a new addition to highest oi in calls it is no longer 6100 ce but 6300 ce,upside is moving further up while 5700 pe is still having the highest oi but since its value has eroded a lot it doesnot hold much significance,notable addition of 11,49,750 is seen in 6000 pe and it means put writers have become very complacent and have no respect for the macroeconomic data that came on friday and today.Some strong hands have held the market through all the negative news and it remains to be seen whether markets keep on going up or resume their downtrend once more at these level as has been the case over the years.

[vinay28]

[paa]

Good job Yashrahul.
Please let me know. Blue bar represent calls and green bar represent puts? am I right??

[yashrahul]

Hello Paa,just read the note during close and you will get a general idea about changing picture of nifty options oi for the month.

[yashrahul]

6200 ce adding more than 6 lakhs in oi,6300 ce adding more than 4 lakhs along with it 6100 pe adding more than 4 lakhs and 6000 pe adding more than 5 lakhs...huge additions in both calls and put ...all i can say is ..."kuch hi dino mein ayega maja"

[apka]

[yashrahul]

14/10/2013

HIGHEST OPEN INTEREST IN PUT:5700PE =62,22,050.

HIGHEST OPEN INTEREST IN CALL:6300 CE =50,27,450.

Note:As mentioned last time due to erosion in the premium of 5700 pe it doesnot have much significance but 6000 pe has added 8,41,450 in oi today,lets see where the markets take us by friday but one thing is for sure market is facing upward resistance and with the data that is available till now the markets whether will be able to sustain at these levels remains to be seen,today was the first example of supply coming in at 6150 levels...but the United States is not going to default(my personal view) so one more rally is on the cards but it is necessary for the nifty to sustain at higher levels rather than just touching a high level and then retracing back 10%..15%...one more question just crossed my mind what if United States defaults?