#Options are powerful instruments to trade if one can understand the overall direction of the market using simple techniques of Candlesticks and Open Interest analysis.
Below chart of Nifty shows OI profile from the Gocharting platform. (Use the code AK20 for offers)
Nifty 60 minutes chart:
Open Interest analysis:
#Nifty open interest profile is showing sharp rise in Calls and Put OI at 17500 levels. This indicates short straddle is into play as of now. So expecting market to expire tomorrow within a range of 17680 - 17340 as per this. As the combined premium of short straddle will result into this range.
Basis of above and looking at the overall market direction for now it is better to trade in direction of big players who are creating above positions. However, to safe guard rather than shorting straddle which is selling both calls and puts of same strike, we can short strangle that is selling OTM calls and put Options.
Nifty 11th August expiry, 17050 Put quoting near 6.20 and Nifty 17800 Calls quoting near 6.20 as of 11.45am on 10th August 2022. Combined premium inflow will be 12.40 and keeping a risk to reward as 1:1 combined stop of 24 can be placed in the system. This means that one can either gain approx. 12 or lose 12.
Given the sideways nature and OI build up there is high possibility that Nifty will not cross either 17800 – 17050 levels by 11th August 2022.
Along with this it is important to also apply opening hour candlestick strategy and Time cycles for higher conviction trades.
By combining Candlestick, Open Interest Profile, Opening hour strategy and Time cycles one can form amazing Option trades for intraday or positional basis.
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