Analyze Bank Nifty Options Chain Data
In the Indian stock market Bank Nifty (also known as NIFTY BANK) is one of the popular indices. Since launched in 2000, investors make intraday in this segment. Investors can easily earn more than 10% – 20% profits doing intraday in bank nifty. It is possible for its highly volatile nature. To the intraday traders 10% profits per day is more than enough.
For intraday trading, it is very important to analyze the technical data of the script. Because it is highly volatile and as an investor you have to aware of the market movement. You should need a strategy for intraday trading in bank nifty.
Many people follow different methods to analyze such as charting, global market trends, or options chain analysis. In this article, I will discuss how you can Analyze Bank Nifty Options Chain Data.
Many people have the lack of this technical knowledge. You will find that answer in this article.
Before starting the main topic just briefly know about Bank Nifty.
Understanding Bank Nifty
Bank Nifty is also known as NIFTY BANK, which is the most liquid script in the Indian share market. It is the bench mark of the most liquid and large capitalized banking sector stocks which trade under National Stock Exchange (NSE). Like HDFC BANK, AXIS BANK, STATE BANK OF INDIA, ICICI BANK and Kotak Mahindra Bank etc. Bank Nifty shows the average movement of the banking stocks. When the high weighted stocks performed well then Bank Nifty shows the positive intend and vice versa.
Investors trade in Bank Nifty with high risk. It needs lots of analysis because of its highly volatile nature. I suggest to do intraday in Bank Nifty. Holding for a long might cause you a huge loss. Using stop loss is a great defender.
Many investors could not find the strategy or the process. Because investing in bank nifty it requires enough technical knowledge.
To analyze the Bank Nifty movement you can do it by options chain data analysis. Using this method you can take your position or exit.
Analyze Bank Nifty Options Chain Data
The options chain shows all the details of securities’ different strike price, puts and calls, volume, and open interest data of a specific expiration period.
I will make you understand by this picture. In this picture, you will find the all data of different strike price and their relative data. Such as CALLS & PUTS, OI, CHNG IN OI, Volume, IV LTP CHNG, BID QTY, BID Pride, Ask Qty etc.
Source of this data: nseindian.com
In Bank Nifty, you can see weekly and monthly expiry. In Bank Nifty’s chart, you can see the put and call writers on the different strike prices.
The investors will take a strike price and then buy from that level on put or call.
The call buyers can buy at a strike price but they are not obliged to buy. If the price goes above the strike price the investor will earn profit and if the price comes down the strike price the loss will equal to the premium.
The put buyers can sell at a strike price but they are not obliged to sell. They sell it on a particular strike price. If the price goes down from the strike price the investor will earn profit and if the price goes above the strike price the loss will equal to the premium.
What Is Options Chain Data
1. Type Of Options
There are two sorts of options: call and put. An agreement known as a “call option” grants you the right, but not the responsibility, to purchase the underlying at a predetermined price and before the option expires. Although the contract gives you the option, you are not required to purchase the foundation. Contrarily, a put option is a contract that grants you the right but not the responsibility to sell the underlying asset at a predetermined price and before the option expires. However, even though the contract offers you the option, you are not required to sell the asset.
The strike price is the cost at which both you and the option’s seller agreed to exercise the contract. Only when the price of an option crosses this strike price your options transaction be lucrative.
You can also like: How to predict the nifty movement?
The moneyness of an option should be known to order to comprehend this. Just be aware that the data in a call option’s grey portion is in the money (ITM), while the data in its white portion is out of the money (OTM). White data for call options are out of the money, and grey data for put options are in the money. Therefore, for call options, strike values below the underlying’s current price are emphasized. Strike values higher than the current price of the underlying are underlined for Put Options.
A thorough examination of the options chain can give you a lot of information about an option and aid in your decision-making on your trade. So learn how to interpret an options chain to improve your trading choices.