#BANKNIFTY

Look how it took support of the upward sloping black trendline https://t.co/mhqkIzBkQN

Sep 23, 2021 - Weekly expiry, preceded by the FOMC meet and not to mention the gap up which then turned out to be a trending day

Here’s how the strangles were converted into straddles & how the positions were managed!

Time for a Thread 🧵

• Wednesday night (IST) there was an event, FOMC meet
• Markets were jittery, as they say, when US sneezes the world catches cold
• Both Dow & Nifty were weak
• All eyes were fixed on the Fed Reserve Chair Jerome Powell’s take on interest rate and the pace of asset purchases

• So didn’t wanted to get caught on the wrong side, hence on Wednesday noon Shorted a strangle
• ~700-800 points away from where the BNF was about to close i.e. 37k levels
• 37800 CE @ 43 & 37700 CE @ 34 & 36200 PE 28 & 36300 PE at 34

• On Wednesday 37K strike witnessed heavy CE & PE Open interest 2.5mn & 2mn of CE & PE writing respectively

• On Wed night, the cat was out of the bag and Mr. Powell kept interest rates at zero & continued the current pace of asset purchases
• Dow celebrated the news and on Thursday morning (weekly expiry) i.e. Sep 23, 2021 BNF opened with a gap up of ~300 points and opened at 37241

𝐁𝐚𝐬𝐢𝐜𝐬 𝐨𝐟 𝐃𝐞𝐫𝐢𝐯𝐚𝐭𝐢𝐯𝐞𝐬 - 𝐏𝐚𝐫𝐭 𝐈𝐈𝐈

Topics covered:

• Moneyness of an Option

• Intrinsic value & Time value of an option

• Why Intrinsic value & time value matters

• Implied Volatility

Time for a 🧵

Curated in collaboration with
@AdityaTodmal

• Moneyness of Option contract:
• ITM option
• ATM option
• OTM option

• Intrinsic Value of an option:
• Positive payoff for the buyer

• Intrinsic value of ITM CE options = Spot- Strike

• Intrinsic value of an:
i) ITM for a CE option: Positive
ii) ATM for a CE option: Zero
• Intrinsic value is never Negative

Options trading is luring a lot of inexperienced traders who are looking for supernormal gains.

However, most of them end up losing money as they aren't familiar with the basics yet.

8 basics you must know before placing your next trade 🧵:

Collaborated with @AdityaTodmal

1/ Option Premium consists of two things:

i) Intrinsic value which represents how much money the option would be worth if it were to expire right now.

ii) Time value represents the premium you pay since the option does not expire right now.

2/ Intrinsic value:

•It is the difference between the strike price and the asset's current market price when the difference is positive.

•Intrinsic value for ITM calls> 0.

•Positive payoff for the buyer.

3/ Example of identifying ITM options:

4/ Time value aka Theta:

• Theta represents the time value decline of an options contract.

•Time value is the additional amount over & above Intrinsic value.

•Time value on an option with 20 days to expiry > Time value on an option with 2 days to expiry.

Do you want to know how to create a Trading Plan using only Price Action?

Here's a breakdown of 11 simple yet powerful steps to create one: 🧵

Collaborated with @AdityaTodmal

1/ Know your type:

First and foremost, understand whether you are a Scalper or Intraday trader or Swing trader or Positional Trader.

Create an account in @tradingview

2/ Set the Time Frame (TF) of the Charts:

• Scalper: the TF you would use would be in the range of 1- 5min
• Intraday Trader: 5-15min TF
• Swing Trader: Hourly to Daily
• Positional Trader: Weekly

3/ Be aware of the trend at higher TF.

No matter which type of trader you are, its important to know the trend at higher TF.

Crucial to know whether its a buy on dip market or sell on rise market.

In my outlook for the week for #BANKNIFTY & #NIFTY I cover multi TF analysis.

4/ Identify the major Demand & Supply Zone:

• A supply zone is the price area where traders have the highest selling interest or potential.

• A demand zone is the price area where the traders have the highest buying interest or potential.

#BankNifty futures on short term charts
CMP 36487 - powerful bullish patterns

Bank Nifty - Technical View

1. Previous bottom pre budget was at 29687
2. Recent high 37700+
3. As per dow theory index held previous bottom and
made higher bottom at 30400+
4. Expecting a new high as per HH HL pattern
5. Breakout above 34287 done.

6. Currently forming a triangle and base size is 6500-7000 pts and trendline breakout point is at 33500 adding this size gives us target of 40000-41000 (33500+6500)

7. Trendline from 2018-2019-2021 comes at 39000 so far, hence 39000-40000 levels are very likely in coming days.

8. There is also CNH pattern where neckline is placed at 34300 and Handle size is of 2000pts, cup size is of 4000 pts

36500-38300 are also potential tgts as per this pattern.

So 36500 first and then 38-39-40k next

#BankNifty -- Blue TL Resistance at 35700-780

Gap area Resistance 34797-35130

Let the index cross Blue line to end this correction. Did the same last 2 times.

Crossing Red Lines triggers fresh rally. Today Index managed to cross yday high

33.9k Key Play the move step by step