New traders dont know that stock market is like politics, what happens in front actually does not happen, and what seems like not happenning actually happens. Trading Bank Nifty is a lucrative job for those who can catch it well. Bank Nifty is much more volatile than Nifty and movement of 150-200 points a day is not rare. So if you can catch the move huge money can be earned from the index. But to know exactly what the smart traders are doing you need the correct tool. So let me present you our new page BANK NIFTY OPEN INTEREST.
To know open interest trading well you need to read my last post on Open Interest: My Secret Nifty Open Interest Data Analysis Technique In that post we discussed how to interprete the first image, Open Interest chart. Analysing open interest we can easily spot the important support and resistances that are actually not visible in naked eye and with technical analysis softwares. Now we will learn how to analyse open interest increase or decrease for successful trading.
Check the image how today Nifty 8700 PUT has the biggest red bar, that means highest put writing seen in 8700 level, so smart players and option writers are taking 8700 will not be breached today. Market was trading at 8715 level and gradually it started moving UP. So no way of shorting in the market, only strategy will be BUY in dips.
In the same way if you find that call is making a big bar in a specific strike price you need to understand that resistance is being built up in that strike and you should short sell in rallies. Similarly you can do bank nifty open interest analysis and trade intraday or positional in the Bank Nifty index. Please add the BANK NIFTY OPEN INTEREST page to your bookmark.
Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.
Sir i have a doubt at what time we have to check this bank nifty open interest and change in open interest. please reply
Naresh, every day you can check the Bank Nifty Open Interest to understand the present support and resistance. And you can check the Change in OI also too understand which support and resistance is going to be respected and which is going to be breached.
Sir that is fine but for taking positions intraday at what time it needs to be checked for example 10 or 10.30 like that i am asking
Keep an initial look after the market opens at the Open Interest chart for understanding the S&R. Keep a continuous look at the change of OI chart to understand the direction. Hope this helps.
sir if i want to buy bnf option on expiry how exactly how should i approach with OI and implied volatility.I am ready to lose small amount as i know it can give me 10/15 times return. I have earned it too, but i wanted to increase my success ratio with detail study.
Vinchi, keep an eye on Options Max Pain. That is the area where expiry is likely to happen. Any move far from Max Pain can initiate a bounce back towards the Max Pain.
Sir based on todays close OI , possibility for put is maximum, while looking at trend finder it says trend is uptrend…. Which one to follow
OI is for veteran traders, whereas Nifty trend finder is for newbies. Obviously OI calculation is done correctly and if you can interpret it well can give you better accuracy. Also, put bars are bigger that does not mean the possibility of puts is more, rather it means puts are more written, so the chance of market going up is higher.