Bank nifty option chain data daily analysis

In this blog, we will share an excel sheet with data points at the end of the day. The main reason for the buying option is that it is a tool for making unlimited money with very small capital and risk is limited to the premium you pay. Options trading can double or triple your money within a day. But the question we need to ask ourselves how many traders make money in long terms by buying options? The answer may surprise you read this blog to find the answer
Stock market educators or institute vs retail traders

Standard Rules of Option chain analysis:

• Download the Bank nifty option chain data daily and analyze the positions
• How to analyze Short and Long positions build-up using the options chain?
• There are 4 possible cases for this analysis

Case 1 - Long CE - Short Buildup PE - UP Move

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• Call side option price increase and open interest increase 
• Put side option price decrease and open interest increase 
• If both conditions fulfill then the market will move up.
• The fresh position is created call side and put side 
• Maximum addition in open interest in call side act as a resistance
• Maximum addition in open interest in put side act as a support

Case 2 - Short Buildup CE - Long Buildup PE -  Down Move

• Call side option price decrease and open interest increase 
• Put side option price increase and open interest increase
• If these both conditions fulfill then the market will move Down

Case 3 -  Short cover CE - Short Buildup PE - UP move

• Call side option price increase and open interest decrease. 
• Put side option price decrease and open interest Increase
• If these both conditions fulfill then the market will move UP due to short covering on the call side.
• But why shorts covering also leads the market to move up or down?
• Shorts covering generally happens when there is positive or negative news in the market
• Previous day positions on the call side which were acted as a resistance to the market are now sifted to the put side to act as a support due to some good news for the market.
• Big players book their losses in the call side and create the position in put side to minimize the losses or to gain greater profits from out side options 
• This process happens in both put and call side - call side short covering leads the market to move up
• ut side short covering leads the market to move down

 Short cover PE - Short Buildup CE - Down move

• Call side option price decreases and open interest increases. 
• Put side option price increases and open interest decreases
• If these both conditions fulfill then the market will move down due to short covering in put side

• Case 5
• Call side option price decrease and open interest decrease. 
• Put side option price decrease and open interest decrease
• If these both conditions fulfill then the market will remain sideways.

Standard terms of option chain analysis

1. The put-call ratio(PCR) is the well-tested benchmark. To find out the put-call ratio we need to divide total put open interest by total call open interest. If PCR is above 1 it signifies bull trend and below 1 signifies a bearish trend. I personally have my own standard. Below 0.8 it is bearish and above 1.2 it is bullish. Between 0.8-1.2 it is no trading range
2. The strikes where you see maximum call open interest(OI) works as resistance and the strike with maximum put OI works as support.
3. If total call addition is more than total put addition on a particular day then you should look for short in underlying stock. If total put addition is more than total calls you should look for buy-in underlying stock.
4. Option premium increases with volatility increase. And premium falls if volatility decreases. Browsers gauge for volatility is India vix.