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Technical Analysis
FNO Data Analysis
ADX Signal for intraday & expiry
Use 13 and 8 Settings in ADX for higher sensitivity with
time frame 3-5 mins
If ADX should be in uptrend below 25 with good
volume in force index
ADX is directionless, but DMI cross-over will signal the
direction. Positive crossover indicates uptrend &
negative crossover indicates downtrend
DMI+/DMI- would have crossed 25 and its current
value should be higher than previous pivot point to
avoid false signal
FI volume should be more than 60K for Banknifty
Price should be above 100 WMA for long and below 100
WMA for short.
ADX Signal for intraday & expiry
Book or Exit if force index comes to zero.
Use short time frame below 5 minutes. Don’t use longer
time frame.
No need to use VWAP if you use 100 WMA
Do not book profit when ADX comes down
It is Gamma Finder. It helps to find the violent
movement in expiry.
It is life jacket if you are doing expiry trading.
It is more affective post lunch.
You will get more benefits if you try to capture through
option selling.
Generally one trade will take 1-2 hours
Example for ADX signal
Position size calculation for intraday
Capital is 10L
Risk 0.50%. Risk amount: 10L*0.50%=5000
Generally SL is 25 points in Banknifty
Hence volume = Risk (Amount)/Stop Loss (Points)
Ex: 5000/25 = 200
Personally I take only 0.25% risk.
Never have position size that can hurt more than 0.50%
of your capital
For other scripts, you can do position size using the
same formula.
How to sell options for ADX signal
Sell only weekly Banknifty options
Sell naked PE for long and Naked CE for short. Premium
should be close to 100 from Friday to Tuesday.
Sell 80 on Wednesday and 50-60 in expiry day.
Make sure that you do not sell ITM options.
The maximum loss shall be premium 25 in total (but do
not place SL at 125)
If signal fails, sell options in opposite side before it hits
your SL 25 and try to come out without loss.
Manage your positions as we manage strangle and
straddle in intraday
Keep 25 SL for the entire trade system, not for positions
How to manage naked options
Assume that you sold naked 27000 CE at 100 for ADX
signal for short
Since we have 25 points as SL, we do not need to keep
SL for 27000 CE at 125
Instead we can sell in opposite side (Sell 27000 or some
strike price PE close to the premium for 27000 CE)
before it 27000 CE goes to 125
Now your total positions could be either short strangle
or short straddle (SS)
Manage your positions as we manage SS in intraday
(will be explained in intraday section later)
If you had sold CE and Banknifty came down 400
points, you can carry forward your positions
Option Selling using ADX signal
It works for all high beta stocks.
Never use this signal when there is a mega event
Do this trade only from 9:30 am to 3.00 pm.
Enable this chart in expiry day.
Exit all sold CEs if you get long signal.
Exit all sold PEs if you get short signal.
Used this ADX indicator to exit my positions in expiry.
FNO Data Analysis
Future Position – Current speculation of Nifty and
Banknifty stocks.
Highest IO – Acts as support and resistance.
Recent Winding and Unwinding of OI – Recent
pulse of option writers.
Put Call Ratio (PCR) – Indicates the mood of option
market for the market direction.
MAX Pain – The point where most options will
become worthless.
Track all these data in our website
https://www.capitalzone.in/fo-data/
Note on PCR
Absolute Value in PCR doesn’t have weightage in
market view
Relative difference in PCR will reflect the option
seller view
Increase in PCR value (compared to yesterday)
indicates that it is bullish
Decrease in PCR value (compared to yesterday)
indicates that it is bearish
Note on MaxPain
Pain is calculated based on OI, not based on
premium
It shifts usually 4-5 times in a monthly expiry
In weekly expiry, it can move violently.
Based on your positions (weekly or monthly), watch
weekly or monthly max pain
All trend-follower can use this for confirmation
Do not reply on max pain if big gap happens
because most option sellers would be in profit with
future which will not be discounted in max pain
FNO Data Analysis Key Points
Consider stock weightage while analysing stock future.
Recent Winding and Unwinding of OI can be ignored if
it is far OTM near expiry.
Consider OI changes near OTMs.
More weightage should be given to Future, Max Pain and
then OI
Strong trend will move along with MAX Pain, PCR and
high OI
Analyzing the Implied volatility
Generally you can look for IV Rank and IV
percentile to know whether it is high IV or low IV.
In short, you can consider VIX below 15 is low IV.
VIX above 15 is high IV for the current scenarios.
Premium difference between current month and
next month in Nifty ATM shall be below 60 in low
IV
Do horizontal spreads in Low IV
Do vertical spreads in high IV
Diversification & Positional size (Positional)
Strangles/Straddles – 50%
Iron fly – 50%
Call Ratio – 25 %
Trend-following – 25%
25 – Monday
20 – Tuesday
15 – Wednesday
5 – On Expiry