Thursday, April 18, 2024

 Nifty Options Trading using Keltner Channel, Volume profile & KST indicator

Options trading requires understanding of momentum. The best indicator to measure this is using Keltner Channel along with KST indicator.

Which are the Powerful Indicators to use for Options buying?

Below chart shows application of 3 powerful indicators – Keltner Channel, Volume Profile and KST momentum indicator. Each of these have its own merits.

Nifty 22500 PE 25th April 2024 expiry:

Nifty 22500 Put Option shows application of Keltner Channel, Volume Profile and KST on 15 minutes time frame.

Volume profile – This indicator helps to understand the area where major volume has taken place. We can see that 200 is the level where lot of activity has happened in this option price. After gap up on 15th April, prices came to retest the volume profile area and also mid of the Keltner channel. This was the classic opportunity to enter on the long side of 22500 put options for the trend to resume on upside.

Keltner channel – shows the possible area of breakout. Currently prices are moving down along with Keltner channel. We need a break in options price above 300 which is mid channel followed by 341 that will confirm opportunity to buy again for positive trend. On downside 200 volume profile area is going to remain strong support zone.

KST indicator - this indicator is a very powerful time indicator and it measures if the momentum is building up or slowing down. Currently the same indicator is now moving below the 0 line suggesting lacklustre movement and this is also in sync with Keltner channel.

In short, as soon as Nifty put options prices give breakout above 300 levels we can get good options buying opportunity for a trend to 400 which is previous price action area.

In a nutshell, one can combine 3 powerful trading indicator to trade options directly.

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