To understand how the big trader makes money, Lets consider this an example.
Data:
Symbol: ADANIENT
Date: 6-Mar-2018
Cash:
Open:202.50
High:203.35
Low:180.10
Close:186.20
Traded Volume (shares):80,63,223
Deliverable Quantity (gross across client level):14,05,359
Futures:
Traded Volume(contracts):7,485
Market Lot:4000
Open Interest: 1,64,28,000
Change in Open Interest:6,00,000
Options:
Total Call Volume (contracts):2,476
Total Put Volume(contracts):1,415
Calculation:
High:203.35
Low:180.10
High-Low = 203.35-180.10 = 23.25 (12.9% down)
Futures Volume(Contracts):7,485
Market Lot:4000
Futures Volume(shares) = Futures Volume(Contracts) * Market Lot
Futures Volume(shares) = 7,485 * 4000 = 2,99,40,000
Options total Volume = Total Call Volume + Total Put Volume
Options total Volume (Contracts) = 2,476 + 1,415 = 3891
Options total Volume (shares) = 3891 * 4000 = 1,55,64,000
Cash Volume(shares):80,63,223
Futures Volume(shares):2,99,40,000
Options total Volume (shares):1,55,64,000
Total FnO volume(shares) = 4,55,04,000
The concept is they need to move the price in spot market and take more positions in derivatives market. In this case, ADANIENT went down 12.9% from the High price, the total volume of 80.6 lakhs shares. In FnO market, the total volume is 4.55 Crores shares Which is almost 5.5 times more than the spot market.
So they easily moved the price in spot market and made huge money in derivatives market.
They are also scared of over-night position that’s why the change in open Interest is always small.
Open Interest: 1,64,28,000
Change in Open Interest:6,00,000
Change in Open Interest(Contracts):6,00,000/4000 = 150 contracts. Only 150 contracts are taken for overnight position in future market out of 7,485 contracts.
