Nifty options : Keeping a record of trend and movement everyday

The aim of this thread is to understand daily trend of index and to find out if a 40% movement can happen in options everyday in the direction of trend.

Nifty levels for tomorrow, Nifty trend, Option trades, Nifty closing analysis


Tuesday, 20 April

Nifty Close = 14296


(Today’s close - Prev close) = 14296 - 14359 = 63 points down

(High - Low) = 14527 - 14207 = 320 points

Nifty trend today :

Using VWAP on Nifty Futures to see basic trend. Nifty opened gap up and had a downward trend for the day.

Nifty levels for tomorrow :

3 din me paisa double?

Think about it. Once you finalize on the trend for the day, or trend for your period of trade, pick an option in the price range of 50 to 100 - say 70.

Options move from 70 to 100 on a daily basis, haven’t you seen? That’s 40%

When, where, how is the question. But it does happen

For example, 22Apr 14400 Put - on Monday.


And how much stoploss you are planning to keep in the above scenario ?

You have found trend and are already in the direction of trend. Why do you want to keep a stop loss? Being in the right direction of trade is the stoploss

Despite that, if the trade goes against you - then monitor your position quickly and cut your position if required. It’s okay to take a loss but minimize it. Don’t let the loss run

Re-enter when you have clarity

How much have you earned till date following this strategy ?

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I’m yet to start following this strategy. All my losses have occured because I haven’t been in the right direction of trade. And i’ve taken plenty a loss

But does this logic make sense to you?

Oh…I asked this because I don’t think it will work in the long run, because you see in option buying we have only 33% probability of winning, so to compensate for the loosing trades, our risk:reward has to be at least 1:3; if it isn’t so then in the end we will just be on the loosing side only.
In intraday catching trend ‘continuously’ is not possible. Also the volatility will force us to get in get out, also adding taxes and brokerages extra along with losses.
To beat the odds, you have to be right at least 70% of the times, which is a herculean task in case of option buying.

Even Hercules would’ve trained a bit no.

Anyway Let’s keep a record here of daily movement and find out for ourselves if 40% a day is possible or not. Also, you have to catch trend only ONCE in a day - this prevents all other soup.

Well good luck to you, if you have such a high confidence.

Once or twice it is possible but you mean everyday it is doable? also what is the stop loss in percent? how much percent of capital available should be deployed to buy options?

Let’s find out everyday if it’s possible or not. First two days of weekly expiry could be tricky but yeah…if there is no movement in index at all - then the options will bleed. Those days will happen too

No stoploss - monitor position and cut it if trade goes against you.

If you want to buy 1 lot of Nifty at 70 bucks it costs 5250. It depends on how many lots you want to trade.

The main intention of this thread is to understand the PRIMARY TRENDS for the day. Option movement in the direction of trend is a by-product and it’s bound to happen

Have you tested this by doing paper trade

You can backtest the data to conclude this.

From my backtested analysis for options from 2017, <30% of the trading sessions in a given subset of over 250 trading sessions(approx 1 year) - market is found to be trending.

You can easily test this theory with stockmock

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This strategy could be useful in a market like the current market - sideways with decent volatility. This could also work in a down move (Oct’20)

But in an upmove (Nov-Jan’21 / Feb’21), wouldn’t you be better of just holding on to a winning trade for few weeks? Consistent upmoves end up becoming much more low volatility, higher probability of small gap ups, with shakeouts. Using this strategy everyday in such an upmove is sub optimal. The trend extends beyond a single day in such a market.

Also, VWAP will tell you the trend after it has already happened. You’ll need to pre-empt the trend beforehand

True it is but this post is to look for a 40% move everyday. It’s only intraday.

VWAP helps me gauge trend continuously during the day - but yes there is intuition built from continuously watching the markets and understanding of levels, overall trend and chart patterns - that will help pre-empt trend

Starting a new thread - need to change the heading of the thread.