I highly recommend you read my book

Definitive Guide to Advanced Options Trading: A quantitative and no-nonsense approach to Option Selling for Income Generation

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Small investment in knowledge can shorten the learning curve.
#TradingBook

Part 4: Understanding #OptionsBasic for #Nifty #BankNifty
In previous threads, we understood Intrinsic/Extrinsic value of options, how to achieve greek neutrality, risk management and how to define cheap or expensive options. Now

What Is Historical Volatility (HV)?
...1/n

Historical Volatility is a statistical measure of the dispersion of returns for a given security or index over a given period of time. This measure is calculated by determining the average deviation from the average price instrument in the given time period.

2/n

Using standard deviation is the most common, but not the only, way to calculate HV. The higher the historical volatility value, the riskier the security. However, that is not necessarily a bad result as risk works both ways - bullish and bearish.
3/n

What it does measure is how far a security's price moves away from its mean value.

For trending markets, historical volatility measures how far traded prices move away from a central average, or moving average, price.

4/n

This is how a strongly trending but smooth market can have low volatility even though prices change dramatically over time. Its value does not fluctuate dramatically from day to day but changes in value at a steady pace over time.
...5/n

#Quora Question - What is the best “I QUIT” moment you have ever witnessed an employee do?

I along with my assistant resigned in the best way I remember. It is no secret that I lost heavily in #Nifty #BankNifty and futures in whole during 2009. I decided to do MBA in finance 1/n

Like that would have helped. By the time I completed MBA, I was broke. In the hopes of a good job and having faced life realities, I did my MBA with utmost sincerity. Up for marketing jobs. Best in communication skills. Ready to relocate and learn new things. I was placed at 2/n

A package of 18 lakh per annum in a Singapore based company. It was huge for me. Suddenly dreams coming true. Turned out, this was a period of fake placements in Punjab. It turned out to be a fake placement. College management realized their mistake and tried to placate me. 3/n

They offered me a meagre package of 3.6 lpa in marketing. I had to take it as it was best available. Being placed at 18 lpa, I was not allowed to take part in interview of other companies. I tried working smart and hard, but when you work for companies run by lala's 4/n

And no professionalism, you get fake promises. I kept slogging at 30k per month which was 3 months delayed and also kept #BackTesting in #OptionsTrading. For 4+ years I kept asking for promotions but always the fake promises. In Feb 2017, me and my assistant were sitting 5/n

William's Alligator is probably the most underrated indicator in moving average category.

Alligator follows the premise that market is sideways for 70% of the time and trending only 30% of the time.

This is where William's Alligator can be a great tool for traders.

Why William's Alligator can be a great tool for traders?

It can identify Bullish, Bearish and Sideways market pretty easily. Problem is, traders don't know how to use it effectively. Alligator has three lines:

1. Lips - Fastest Line
2. Teeth
3. Jaws - Slowest Line

Book Interpretation is when Lips Crosses above Jaws, it's a buying opportunity and when below its a shorting opportunity. And when three lines are crisscrossing, instrument is sideways.

BUT this does not make it a tradeable indicator in practice. Here is what should be done.

Firstly, when all the Alligator lines are moving up or down and are widening, this phase is called "Alligator eating with its mouth wide open". When the lines are crisscrossing, this indicates the alligator is sated.

Now, how to use it? with Basic TA and Indicator like MACD

Rules to remember:
1. As long as price is above Alligator, BANKNIFTY is bullish.
2. As long as MACD is trading above 0 line, BANKNIFTY is bullish.
3. Horizontal Lines are the only S&R.
4. CONGESTION is followed by TREND is followed by CONGESTION.

William's Alligator is probably the most underrated indicator in moving average category.

Alligator follows the premise that market is sideways for 70% of the time and trending only 30% of the time.

This is where William's Alligator can be a great tool for traders.

Thread 🧵

Why William's Alligator can be a great tool for traders?

It can identify Bullish, Bearish and Sideways market pretty easily. Problem is, traders don't know how to use it effectively. Alligator has three lines:

1. Lips - Fastest Line
2. Teeth
3. Jaws - Slowest Line

Book Interpretation is when Lips Crosses above Jaws, it's a buying opportunity and when below its a shorting opportunity. And when three lines are crisscrossing, instrument is sideways.

BUT this does not make it a tradeable indicator in practice. Here is what should be done.

Firstly, when all the Alligator lines are moving up or down and are widening, this phase is called "Alligator eating with its mouth wide open". When the lines are crisscrossing, this indicates the alligator is sated.

Now, how to use it? with Basic TA and Indicator like MACD

Rules to remember:
1. As long as price is above Alligator, BANKNIFTY is bullish.
2. As long as MACD is trading above 0 line, BANKNIFTY is bullish.
3. Horizontal Lines are the only S&R.
4. CONGESTION is followed by TREND is followed by CONGESTION.