Option strategy based on Open interest on Options

Which options to sell with less risk. What is the range people are expecting for market

In this blog I am going to explain which options should we be selling as per what people are perceiving the market. It is generally observed that people sell out of money options. they will sell an out of Money call option and out of money put option. At these positions open interest increases. We are trying to leverage this data at which open interest values are higher. I have developed an algorithm which will suggest which are suitable options to buy or sell. This is a short strangle strategy where it suggests which options to buy or sell. This has more accuracy with Index options because of high liquidity. In stock options, we have less liquidity in Indian market and stocks are more volatile than index. Bets on stock options can go wrong.

How to use Open Interest options functionality at optionstrategy.co.in

1. Go to URL- optionstrategy.co.in and click on "My Stratgey"  button.
2. Now select Index stock which you want to analyze and then select script name.

3. Now click on Open Interest options button at left side.

4. You can see calls and puts with their respective strike prices populated. These vakues are suggested based on open Interest in market. We generally go for 4-5 strike prices lower and check for open interest where it is maximum.

In this scenario it has suggested us to sell at strike price of 6600 and sell a put at strike price of 6200.  The suggestion shown here is based on EOD prices.
Please ignore the valuation date as we are showing graph for multiple valuation dates.

In case you think this is not suitable, you can change strike prices and valuation date and click on My strategy button. 

Note:- These strategies are just for illustrative purpose. Users are required to use their own judgement before entering in any strategy. We are not responsible for any loss.

Please email us your suggestions and feedback at info@optionstrategy.co.in

Happy Trading!!!!

Creating your own option strategies

Create and Analyze your own Option strategies - How to Use

In this blog I am going to explain how we can use this application to create your own option strategies.  Depending on market condition you can take a call which option to go for.

1. Go to optionstrategy.co.in and click on "My Strategy" button.
2. Under Index/ Stock, select one of the instruments that you want to play with.
3. Then select the script. The example that is demonstrated here is with NIFTY. The strike prices associated with it will be populated under Strike price combobox. 
4. Select the valuation date by clicking on the calendar icon button. This date should be less than or equal to the minimum expiry date that you are planning to use.

5.Now select one of the Option types. If you have selected Index, then you can select one of Call, Put or Futures. If you have selected stock, you have the option of selecting stock also.
6. Once instrument type (Call/ Put/ Futures/ Stocks) is selected, select one of the strike price. To get more reliable results, prefer liquid strike prices. Generally 3-4 strike price above and below spot price is liquid. For stocks, the criteria narrows further.

 

7. Select buy or sell.

8. You can change the expiry date if required

9.  Enter the price that you think you can buy or sell the instrument. Currently the prices are based on End of Day prices. You can also enter the price that you have entered in the strategy earlier.

10.  Select number of lots you want to trade with.

11.  You can select other call or put option, futures or stocks with different parameters in other lines.

 

12. Now click on My strategy button.

13. You can see a chart appearing below showing how the pay off graph will look like.

 

14. You can get an idea around which range your profit or loss will begin. 

You can create your other such strategies depending how you perceive the market. 

You can change valuation date and see how your pay off strategy will look like within short time frame.

Note- The values displayed are for approximation purpose only. they don't show accurate results because of market forces. With change in option moneyness, implied volatility will change and it will affect the option prices.. 

 Mail us your queries/ suggestions at info@optionstratgey.co.in

 We would be happy to help you.

Happy Trading!!!!