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Technical Analysis
FNO Data Analysis
Divergence (For Stock Option)
Click Here to Watch My Talk in Traders Carnival About
Divergence
ADX Signal for intraday & expiry
If ADX should be in uptrend below 25 with good
volume in force index
ADX is directionless, but Force Index will signal
direction. Go long if Force Index is positive and Go
short if Force Index is negative.
FI volume should be more than 100K for Banknifty
Price should be above cloud for long and below cloud
for short.
For expiry trading, use VWAP instead of cloud
Book or Exit if force index comes to zero.
Use short time frame below 5 minutes. Don’t use longer
time frame.
Example for ADX signal
Position size calculation for intraday
Capital is 10L
Risk 0.50%. Risk amount: 10L*0.50%=5000
Generally SL is 20 points in Banknifty
Hence volume = Risk (Amount)/Stop Loss (Points)
Ex: 5000/20 = 250 (Trailed to 240 for Banknifty)
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 at any day.
The maximum loss shall be premium 20 in total (but do
not place SL at 120)
If signal fails, sell options in opposite side before it hits
your SL 20 and try to come out without loss.
Manage your positions as we manage strangle and
straddle in intraday
Keep 20 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 20 points as SL, we do not need to keep
SL for 27000 CE at 120
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 120
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)
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.
For expiry, use VWAP instead of cloud because we want
to capture early violent move
Exit all sold CEs if you get long signal.
Exit all sold PEs if you get short signal.
You can also buy ATM or ITM options based on force
index direction to hedge your sold out options.
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 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.
Consider delivery volumes along with speculation.
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
Diversification & Positional size (Positional)
Strangles/Straddles – 50%
Iron fly – 50%
Call Ratio – 25 %
Trend-following – 25%
Put Calendar – 25%
25 – Monday
20 – Tuesday
15 – Wednesday
5 – On Expiry
Bullish
ATM, ITM, Diagonal Put Calendar
Credit spread in PE
Long Put Butterfly
Bearish
OTM Put Calendar
Call Ratio in CE
Credit Spread in CE
Range-bound/Non-Directional
Strangles/Straddles/Iron Condor/Iron Fly/Twister Sister
Implied Volatility Vs Strategies
Low IV
Butterfly (Range-Bound)
ATM Put Calendar (Bullish)
Call Ratio (Bearish)
Iron-Fly
High IV
Iron Condors (Range-Bound)
Twister Sister/Strangles/Straddles (Range-Bound)
ITM Put Calendar (Bullish)
Sell CE (Bearish)
Trading Goal