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
=2454.4
=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.
