DON'T DEPEND ON BANKNIFTY PRICE ACTION BUT USE UNDERLYING STOCK BASED SIGNAL SYSTEM
DON'T GUESS ALWAYS FORECAST.BECAUSE PRICE ACTION IS SUBSET OF EVENTS + VOLUMES
THIS WEEK GIVEN ALL TARGETS COMPLETED
ENJOY 840 POINTS THIS WEEK IN BANKNIFTY
Trade using Market Internals never loose your money
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A position that looks profitable on spot chart, in hindsight, may end up losing in real time in BN options.
Just an observation that I wanted to share coz I trade in BN options.
Secondly Handling Options, With the weekly expiry in Nature BN options can bring nightmare to Buyers :), But In this case I suggest most of the traders to go ahead and become option writers. And yes there is an assumption that With Option writing Limited Profit, Unlimited risk. But with the Theta(Time Factor) working in your favor you are poised to win. And Yes there are Gama Bursts in Weekly expirys but they are very limited or rare.
So the 2 deciding factors in Option Premium are TIME + Volatility and they are the inputs for out come of option premium.
As mentioned above by writing option, We are making Time to Work in our Favour. And the 2nd Factor Volatility is taken care by Creating VIX bands(Adjusted to BankNifty Beta) and By applying the Gaussian Standard Distribution we create 2nd SD bands and by the Distribution definintion, If we are taking any options near to the 2nd SD 95.4% of the Times the price will not touch that point.
SO WE WENT IN TO THE BANKNIFTY FORMATION AND OPTION PREMIUM DEFINITION MODEL TO HANDLED BOTH (TIME AND VOLATILITY) AND FORECAST THE BANKNIFTY DIRECTION USING ITS INTERNALS RATHER THAN DEPENDING ON BANKNIFTY PRICE.
THE ABOVE APPROACH IS TAKEN TO SOLVE THIS PROBLEM.
Please do let me know if you have any suggestions or Inputs I will happy to hear :)
Happy Trading and its a Lift time skillset.