Automated Nifty option chain analysis (monthly)

Nifty Option Chain

nifty option chain analysis

What is an Option chain?

Options chain, also known as an options table, listing for a single underlying stock that shows all of the available option contracts. It shows all listed calls, puts, strike prices, and volume expiration date, and pricing information for a single underlying asset within a given maturity or expiry. Option chain will typically be classified by expiration date and divided by calls and puts.


Option chain data is that the complete picture concerning option strikes of a specific index or stocks during a single table. within the Option chain table, the strike price is at the center and everyone’s data concerning calls and puts on an equivalent strike are presented next to every other. Normally, the calls are on the left side of the options chain and therefore the puts are on the right side of the options chain. the options chain not only captures the worth and volume data but also more analytical parameters just like the changes in open interest (OI), changes in implied volatility (IV), etc.

Automated option chain table components

Before understanding the way to read the Automated options chain data on our website, allow us to first check out the key components of the automated options chain. An option chain trading strategy is often formulated by analyzing accumulations in OI and volumes in various option strikes. There are two ways to approach the automated options chain data. there’s the index approach which tells us not only about trading the index but also about the market as an entire. Same as the Sectoral indices are very useful in giving us cues about the attractiveness of the actual sector in question. Then there are stock-specific option chains which are useful as another analytical screener before taking a final judgment on buying or selling a stock. this automated options chain analysis is often used as a further level screener for stock decisions.

Interpreting Nifty Option Chain

The option chain pertains to the Nifty automated options of the varied strikes. Here is the way to interpret this index automated options chain.
It gives you a fast and rapid picture of ITM in-the-money and OTM out-of-the-money automated options. While the strikes shaded in yellow are the ITM options, the un-shaded strikes are the OTM options. This rule applies to calls and puts.
The automated option chain allows the trader to gauge the liquidity and depth of every specific strike. the options chain doesn’t only capture the executed price but also captures real-time price, ask price, bid quantity, and ask quantity. Once you combine these, you get a transparent view of depth and liquidity in each strike and also overall.
The Nifty automated option chain is often used as a warning system of sharp moves or breakouts within the index. More so because large institutions are more active in index options and that they account for over 60 to 70% of daily trading. The sudden spurt in OI of a specific strike or the reduction of OI at a strike is indicative of much-focused action within the Nifty. this will be a useful pointer for traders.
Traders can use this feature chain to gauge action in deep OTM out-of-the-money calls and puts. Normally, the sudden spurt in action in deep OTM calls and puts is indicative of a breakout therein direction. the massive institutions with their large networks and high-end research may have seen a trend within the Nifty much before the others. you’ll get such cues through the automated options chain. The IVs are often wont to substantiate these findings.

Stock Option Chain

Compared to the index automated option chain, the option chain doesn’t give macro-level indications. But option chains are often useful as a stock level indicator. Here are insights you’ll glean from the stop option chain.
For a trader, this is often the simplest single shot view of all the strikes within the market on a specific stock. Which strikes are liquid and which strikes carry basis-risk are often judged with this sheet. That becomes a useful input for options traders.
How is that the hedging on the stock actually happening? which will be judged by the options data. Normally, institutional investors tend to hedge their risk during a stock by buying put options or they hedge their short futures with call options. the options strike analysis shows you at what price traders and investors are becoming sceptical of a few stocks.
The option chain helps to define a variable for the stock. Normally, the worth limits of stock are within the range where the incremental option accumulation is that the maximum. For traders, this will be an honest thanks to determining the range of the stock.
Automated Option chain gives you one view on the economics of straddles and strangles at different strike prices. within the event of volatile expectations, one can purchase strangles and within the event of range-bound expectations, one can sell strangles. the options chain allows a fast analysis of strangles at various strikes and one can substantiate the view with other data concerning IVs and OI.

What is happening in a stock?

What is happening in a stock? you’ll use the automated options chain to catch a scent of some positive or negative announcements that would be likely. Is their sudden change in volumes and OI in deep OTM calls or deep OTM puts? this will be a sign for you to probe deeper. More importantly, this will work as a final level screener for your stock buying and selling decisions.
An automated Option chain may be a useful table not just for options traders but also for cash market traders. this is often true of stocks and indices.

Disclaimer : 

Blog Provides Views and Opinion as Educational Purpose Only, We are not responsible for any of your Profit / Loss with this blog Suggestions. Owner of this blog is not SEBI registered, consult your Financial Advisor before taking any Position.