In technical analysis, majority of the patterns were first …

IV - A thread

In financial mathematics, implied volatility of an option contract is
that value of the volatility of the underlying instrument which, when
input in an option pricing model ) will return a theoretical value equal to the current market price of the option (1/n)

Implied volatility, a forward-looking and subjective measure, differs
from historical volatility because the latter is calculated from known
past returns of a security. .
https://t.co/iC5wVf7kvj (2/n)

To understand where Implied Volatility stands in terms of the underlying, implied volatility rank is used to understand its implied volatility from a one year high and low IV.
https://t.co/NFPOidRRcH

https://t.co/qNqinEqaKY

(3/n)

Options traders are always looking at the IV and IVR/IVP. For option
buyers, a low IV environment is best to initiate positions as the
subsequent rise in IV actually helps their positions . Even if the IV
remains flat, the position is not hurt by volatility (4/n)

Option sellers on the other hand are looking for high IV scenarios, where
the subsequent fall in IV ( known a vol crush , most often seen after
earnings/events) helps their positions. Here also, if the IV does not
rise, it does not hurt a seller's positions (5/n)

Subhadip Nandy
@SubhadipNandy16

Options and their price action analysis.
Read 👇👇

A small write up on how the OPTION PRICES BEHAVES AT SUPPORT & RESISTANCE pic.twitter.com/eBlXAZU4Ma
— Bijay (@Bijay_reborn) July 17, 2021

Subhadip Nandy
@SubhadipNandy16

I see a lot of traders following classical chart patterns . Being a pattern follower myself for some years , here is my advice to them as I feel some pointers will improve their accuracy . Again , this is not the only correct way but what I have learnt from my experiences

1. Volume confirmation is a must. Without the volume rules being fulfilled , there is no importance to the pattern

2. Understand where the pattern is taking place within the major price structure of the index/stock. An inverse head and shoulders bottom reversal occurs at market bottoms , not at market tops

3. If a pattern is valid, it will leap out at you from the computer screen . If it takes a lot of time for you to "see" the pattern , you are probably imagining things

4. Understand how the market players operate so that a pattern is created . Understand the psychological basis of market participants within the pattern . Best resource : Technical Analysis of Stock Trends by Edwards and Magee . You should read the book at least 10 times or more

Subhadip Nandy
@SubhadipNandy16

Rule 4 : If buying a naked option, always ensure that implied volatility is low. This can be understood from the level of IV vis a vis historical IV levels. Use IVR or IVP etc.
For a naked option to make money, it's better if IV rises or at least stays flat.

Rule 3 : DO NOT run or trade everything that moves. Focus on a few stocks and master them. When a move comes, make the max out of that move.
Example : in this crazy mkt, I did not even trade TataMotors this week. Stayed focussed on ITC and it gave good returns https://t.co/41wkugZg1I
— Subhadip Nandy (@SubhadipNandy16) October 14, 2021

This is a thread I wrote on IV, IVR etc

IV - A thread

In financial mathematics, implied volatility of an option contract is
that value of the volatility of the underlying instrument which, when
input in an option pricing model ) will return a theoretical value equal to the current market price of the option (1/n)
— Subhadip Nandy (@SubhadipNandy16) September 20, 2018