Banknifty Options Selling Expiry day - Simple strategy

Technical Analysis
1

On the expiry day, Market movers will move the price based on their positions. We never know how they are going to move (up or down). So, What we can do?

We can monitor the number of open positions using Open Interest and follow the option sellers.

Price Decreases and OI Increases -> Option sellers are gaining money
Price Increases and OI Decreases -> Option sellers are losing money

Check the Banknifty option chain in NSE website and see the Change in OI column for each strike price.

If price decreases and Change in OI is greater than 400000(20000 lots), then most likely option sellers will win. You can sell the options and put the S.L as intraday high. If the change in OI is keep going up like 600000,700000 then mostly the option will expire as 0.

You can exit the position either if S.L hit or Change in OI falls below 200000(10000 lots).

Please remember that the data is bit delayed on NSE website and the big traders use automatic trading software to move the price. So within a minute they can add lots of positions. So, always put the S.L.

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2

From your explanation, I think we can use it for option buying too

3

in theory , it sounds good … but this OI data esp on the expiry day is of no use
it doesnt take much time to cover 5/6L OI in 30mins …

i have screenshots of the last expiry day trade/data ( 25th April )…

@11.30 AM … very high put selling ( 29900 till 29600 ) and moderate call buying in theory ( BN at app 30,000 )…

But BN was trading arnd 29700 at 3.10 and closed below 29550 …

4

Yes. You are right. Since this strategy is to follow the option sellers, if they lose money then we lose too. So, always put the S.L

But what happens mostly is if they lost the money on Put side then they will take more positions on call side to cover the loss.

5

Bro, oi change only gives trend for a short time during expiry day. Maybe for next 10 or 15 minutes.

Taking short positions based on intraday oi change during expiry day is not wise.

You can always take a hedged long position to minimise loss and maximize profits

Personally, I use a modified version of butterfly spread on expiry day.

6

Putting SL and trailing is a good trading strategy.

If I remember it correctly, during last week expiry, the price of 29800 pe and 29700 pe jumped more than hundred rupees within seconds. I am not sure SL will work during these type of jumps.

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7

my point is we can’t take OI data on the expiry day …
thing is data might is delayed ( even the OI i get from nse now or nest ) and the signals ( mean based on oi and price change ) is totally unreliable on expiry day

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8

that’s the same point i am making :slight_smile:

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9

Bro you have subscribed to kite API ? They are providing live oi data. We can calculate oi change with that

10

i am not trading with zerodha now …
we can get live OI data with nest or odin as well …

i am absolutely certain that using that data for decision making for expiry trades will be unreliable …
i did automate few things related to oi changes on BN strikes on expiry day though

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