Nifty futures has been quite volatile for almost three months now. We are just seeing a sideways move just before a new/fresh upside move. In this type of scenario we find trading in options quite risky, so to improve decision making we have introduced a new trading style in nifty options using Open interest. Yes, by using open interest data correctly any trader can generate handsome returns.
First of all, you need to know what is open interest.
Then, using the open interest to find support and resistance.
Check the trend using Nifty Trend Finder Tool.
The first step, you need to know the trend of nifty future. As of now, we see a short-term trend is mixed with a downside bias.
Check the news factors that may affect the trend. Example: Bihar election, Fed rate decision, Manufacturing data from China, Crude oil, and many other factors have a potential impact on the overall trend.
Now, look at the nifty options live open interest excel sheet. In this excel sheet, you will find the open interest for all the active strike price. These strike prices are for both calls as well as put options. Now, the thumb rule is if markets are volatile or sideways then you will find support and resistance very accurate. But if the market is in a trending state, then look for technical analysis charts and get the major levels. Like you can look at the options open interest data and find the potential range for nifty and also bank nifty. I prefer bank nifty as it has the weekly expiry for its F&O contract. I am also an option writer so selling on expiry with the open interest sheet can be extremely helpful.
To make real money try to keep your trading cost low, for options trading you can buy or sell @ Rs.20/- brokerage charge. To know more check here.
Article updated on 18.08.18.