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Δ OI – Nifty Expiry Example.

Today we thought of putting up an example from an expiry day on “nifty” as so many traders out there are index traders who rely on derivatives data.

Before we move on we want to reiterate that you have to be eagle sharp in listening to all the relevant data point when it comes to index trading because it’s movement is controlled by so many factors.Refer our earlier example Δ OI on index to get more insights.

Now moving on to the Δ OI application to today’s example, any trade that you want to take has to satisfy the criteria set in our post “Δ OI taking a trade” without which a trade doesn’t become successful.

Step 1 : Identify the big money’s positions

This will be a bit easy in index compared to stocks because you don’t need to scan through a lot of history to check these and are visible easily if you just check for 2 days.

For today we identified one such instance in the morning itself with a quantity of 276k just 5 minutes after the open during 9:20-9:30. See image below.

Notice that we are not referring to the opening 10 minutes activity because it is to be taken with a bit of caution as mentioned in our earlier posts.

See that 276k within 10 minutes at an average price of 12148.5 which is their buy price.

Step 2: Confirming if this quantity is actually playing out in the market behaviour.

Nifty taking support at that big money’s buying level is the confirmation.
When it was taking support there, there are no significant shorts coming rather existing shorts getting out added to the above signal

Also to add this there was no significant opposing force that’s seen which will add up to conviction for these types of days.

Step 3 : Taking the trade

You could have got the entry around the big money’s buying level anywhere between 11:30-12:30 this is the time when we posted our ITM Put short idea of sell 12200 PE on twitter.

Step 4: Stop loss and profit.

As mentioned earlier this can be 1:1 or 1:2 depending on your risk reward.

This trade today would have needed a good amount of patience but a quite easy one when seen in terms of data and analysis.

Also you might be wondering how come we were so confident of an ITM put 12200 PE instead of ATM 12150 PE.

One reason is that the buying price of is around 12150 which is already acting as support in futures so logically any rally would be towards 12200 and that’s the rationale.

Also see below the opening shorts in 12200 PE which are in line with the futures buying.

See the morning buildup and one of the lot exited in just 30 mins keeping the other lot which gave us confidence to select this strike. and the stoploss price mentioned was 105 which was the entry of this first lot of 100k and entry was just below the entry price of second lot of 107k.

So this is how a trade with high probability has been found, we hope this post clears out some of your doubts on how to use this data and the platform.

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2 replies on “Δ OI – Nifty Expiry Example.”

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