A simple question for newbie futures traders: Test your FNO Knowledge


#1

This simple question is meant for newbie Futures Traders Only. Because Experienced or Professional Traders know how FNO mkt works and it’s very simple for them :grinning: Still they can add their view.

QUESTION: There are 4 traders. Suppose Nifty Future (NF) is trading @10,450.
1st trader sold 10 lots of NF. 3rd trader sold 10 lots of NF. 2nd trader bought 10 lots and 4th trader bought 10 lots @10,450.
After the transaction… 1st trader & 2nd trader thought they are foolish Or unlucky, 3rd trader became happy and 4th trader became optimistic about his transaction.

1# How this is possible?
2# What will be the OI Change with that transaction (in lots)?


#2
  1. 20 lots increase in OI

Not able to figure out Q 1.


#3

20 Lots increase in OI is not correct. Without figuring out the Que No. 1 it’s difficult to answer the OI Part. Because both the questions are interrelated. Btw thanks @portfolioplus911 for the attempt.


#4

The questions is either wrong or purposly does not reveal all details. In that case this is not a puzzle but a trick.

Trader 1&3 sold 10 lot each. Therefore there is no way trader both 2&4 can buy 10 lot EACH (20 X2 lots in total) from trdr 1&3


#5

You are right @daredevil There was some problem with the phrasing of the question. Now corrected. Basically 20 lots sold by 2 traders and 20 lots bought by 2 traders @10,450. This is not a puzzle and not a trick also. Just a situation to analyze how Futures transaction happens and how to calculate OI etc.


#6

Ok to make it little more interesting let us assume this :point_down: r not the answers

_"the trader who felt happy squared off the position. Therefore the OI is 10 lots _
OR
traders who felt happy and optimistic both squared off therefore the OI is zero"
because being happy and optimistic does not mean “position squared off”

Now go ahead and answer your riddle.


#7

When a trader usually becomes Optimistic? The moment he takes a new trade. Irrespective of new buy Or new sell (new long Or new short position).


#8

ok u have third answer.

Let me give u fourth answer:

The guys who felt foolish and unlucky went onto for a revenge trade and shorted some more. and the happy and optimistic guys bought more of it so the OI is like 100 lots. :upside_down_face:


#9

Only 2 transactions took place at that particular price in NF. 2 traders sold 20 lots and 2 traders bought 20 lots. So no question of OI change of 100 after that (answer is different). But thanks @daredevil you at least attempted. That’s important.


#10

if these are the only transaction then wht @portfolioplus911 said was correct. If more transaction took place in some other price my answers can not be wrong…

hmm… r u trying to go in circle here?


#11

OI will increase …trader 1, 2 and 3 squared off their old trades so they were happy/ sad etc. So their transactions will make no effect on OI.
Trader 4 initiated a new buy trade as he is optimistic … this should lead to increase in OI


#12

Hi @Vandana1 :grinning: Fantastic attempt. But the OI Change was incorrect. Helping you to solve the questions…

1st Que: Find out what were the positions of individual traders 1st, 2nd , 3rd and 4 th traders (Old/new longs Or shorts).

2nd Que: Then calculate the OI change based on their positions. How many contracts decreased Or increased Or remained same.

It’s not that difficult (just time-pass question). Best Of luck :grinning:


#13

Thanks for explaining Akash … I’ll try to solve it again :smiley:


#14

@AkashKB
T1 and T2 booked losses in their trades , thus they felt foolish or unlucky. T1 Sold and T2 Bought - OI has reduced by 10 lots. T3 became happy, he might have booked profit. T4 is optimistic, so he might have opened a new position. T3 sold and T4 bought it.So no change in OI in this transaction as T4 is initiating a fresh trade.
Net of -10 lots(-750 qty)
Does this make sense :slight_smile: