Oct 23, 2012

Some practical futures and options tips/lessons

Some practical futures and options tips/lessons
  • ·         When implied volatility (IV) of deep-out-of-the-money PUT is very high, it indicates hedged positions.
  • ·         Read newspaper options ticker as below,

5900 (25, 25, 2.5, 14.15)
Strike price (open, high, low close)
[42k, 832, 2454.4,] 3L, Feb 28
[traded quantity, no.of contracts, notional value] open interest, date.
Traded quantity= no.of contracts x lot size=832 x 50=41600 (42k)
3L=3 lakh=open interest
Notional value= stock price/here nifty price x traded quantity
Here, 5900 x 41600
=24.54 crore
  • ·         Rise in stock price with rise in open interest means rise in long positions.
  • ·         Formation of more long positions tends to increase CoC or cost of carry. Continuous decline in CoC not good for stock to rise.
  • A lot of data useful for derivatives analysis is available on nseindia and bseindia website.

Posted on Tuesday, October 23, 2012 | Categories: