Best Options Trading Books in India-Must Read 2022

The Options Wheel Strategy, also known as the Triple Income Strategy, is designed to generate income from option premiums. The author has explained various ways to attain healthy profits via strategies. He also throws light on how to trace patterns and huge opportunities in the market. To make you understand the power of each technique the author has used some real-life examples.

option chain analysis books

Similarly, for Puts, maximum option writingis at strike followed by and strikes. See that huge open interest is usually built at strikes that are OTM . On the other hand, if a buyer and a seller are both closing out their existing positions, open interest reduces by 1 contract.

What is SGX Nifty? Can Indian trade in SGX Nifty?

In the case of the above example, 12200, 12400,and are resistances while 12000, 11600,and are supports. Meanwhile, as Call and Put have maximum OI, these are the strongest resistance and support, respectively, in the option series under observation . What this means is that as of now, market participants expect Nifty to move in a range of and for the current series. The Volume tab displays the total contracts traded during the day for each strike price and for each of the option type. As a rule, the higher the volume, the more liquid the option contract is, and vice versa.

Instead, one must always compare open interest with price to understand the strength of the move. In the table below, we have highlighted the relationship between price and open interest. For “Options Trading”, this is extremely useful as it shows where the rest of the market participants are seeing support and resistance.

On the other hand, open interest that does not confirm the price action indicates that the trend is on a weaker footing and could soon run out of steam. is a stock market-related news, analysis, prediction and knowledge-based website. It started with an intention to increase the knowledge of investors on various stock market investment products.

comment on “Finding the Trend of the Market using Option Chain”

Keep in mind that the entire Option Chain must be monitored and not just the options that are OTM. The change in OI tab displays the change in Open Interest that took place during the day for each strike price and for each of the option type. A positive value indicates an increase in Open Interest for that day, while a negative value indicates a decrease.

option chain analysis books

Institutions and other big funds usually write/sell options and finding which strike prices has most open interest can tell us the support and resistance of the market for that expiry. Another important thing to keep in mind is that Option Chain analysis should be done only on instruments that are liquid. Performing Option Chain analysis on instruments that are illiquid will often give incorrect information and will be prone for errors. Having said that, before trading stock options, we would suggest the reader to look at the individual Option Chain monitor to find out whether or not theseinstruments are liquid at any given point in time.

Some traders also use IV and Volume to make sense of these numbers, however for a beginner OI and Change in OI are sufficient. This book contains information on options trading from start to end, giving us insight into how advantageous option trading can be. These audio books help you in understanding the basic and advanced concepts of the market and how options are different form another form of trading in the simplest and easiest way. The book reveals concepts like non-optional trading, strategies for non-directional trading, and how to use trading techniques to suit your style. The book comprises many charts and illustrations along with real-life examples for better understanding. It inspires the readers to become sharp cunning traders with the help of real-life experiences and examples.

We are not SEBI registered advisory but having enough knowledge and experience in the market. It explains why non-directional trading doesn’t require much analysis of charts or price patterns etc. This book is a great pick if you are looking for all strategies and concepts compiled in a single book. The author has covered every concept from the pricing variables to the market’s volatility. The accuracy of the strategies is a driving force for the gains earned.

Hence, an important thing to keep in mind is that volume should never be looked at in isolation. We have seen how Option Chain can be used to get a holistic picture of the underlying asset that is being monitored. However, we would like to caution the reader that Option Chain is not a substitute for other forms of analysis, such as Fundamental and Technical analysis.

How to Make Money Trading Options

This is an indication that the trend of the underlying is weakening.So, supports and resistances both shifting higher is bullish whereas both shifting lower is bearish. On the flip side, supports shifting higher and resistances shifting lower, or vice versa, indicate indecisiveness about the trend of the underlying. Volume refers to the total number of contracts that are created over the course of the day. For instance, a volume of 100 represents 100 contracts have been traded on a particular option during the day. Keep in mind that in the options segment, for every buyer, there is a seller. So, at any point in time, the number of buyers and the number of sellers will be equal.

It is designed to assemble some of the best Options traders in order to share deeper trading knowledge to the retail traders community. OPTION OMEGA 3.0 is an exclusive annual event of the Traders Gurukul family. And usually the OTM options gets shorted heavily, if we could find out whether Put OTM Options are shorted heavily or Call OTM options are shorted heavily, we gauge the market direction.

In the case of the above example, a volume of 100 means that there were 100 buyers and 100 sellers and that combined, they accounted for a total volume of 100 contracts. If you wish to know how options trading works in the real world, this book is for you. For novice traders, the options trading market can be quite difficult to understand but with the help of this book, you can understand the concepts easily. But it is a definite one-time read book if you are a beginner, if you lack a basic understanding of options, or if you have not been convinced why a trader should try options trading.

Besides, it also provides a detailed explanation of how to use this OI data to predict the important support and resistance levels and how to define different strategies using them. It starts with the basic concepts of options and explains why a trader should look to trade in options when they have the choice of trading in other instruments . OPTION OMEGA 3.0 is one of the largest retail option trader’s online conferences in India.

  • We have seen how Option Chain can be used to get a holistic picture of the underlying asset that is being monitored.
  • The trader will instead have to compare this figure either with the past volume data or with the historical average or for that matter even with other option contracts.
  • As a rule, the higher the IV, the more volatile is the option price for a given change in the underlying price, and vice versa.
  • It is a feast for any trader who has the basic knowledge of options and wants to earn constant income.
  • This book is packed with many real-world examples to demonstrate how to create your own small hedge fund by applying the basic framework model of insurance companies.
  • Meanwhile, as Call and Put have maximum OI, these are the strongest resistance and support, respectively, in the option series under observation .

The process of Identifying right strike price with Proper Risk management. Credit and Debit spreads are risk defined strategies, and using charts of the spreads option chain analysis books make them more effective and also reduce the risk further. On the option chain on the new NSE website though, all three are expressed as number of lots.

Option Trading Books By Indian Authors

For example, ‘Delta’ indicates the options’ price sensitivity in relation to changes in the underlying instrument’s price. All the strategies are explained with large images which are easy to read and understand. In addition, there are many handmade notes; simple day-to-day examples are included to explain many strategies that help a novice understand the concepts better. You will get to listen to 12 awesome speakers talking about options trading sitting at the comfort of your home. This is an intraday strategy is designed to generate profits over a longer-term period if one follows it with discipline as it exploits the theta edge over the period of the day. As this is a Discretionary process, one needs to understand the risks involved in this strategy.

The book comprises 40 strategies and a guide on how these strategies can be put into action. This easy-to-understand book is packed with lots of information on options trading. It talks to readers about numerous trading decisions and how to resolve critical decisions. I hope you liked the above list of good books on options trading. It explains in detail about Open Interest and how to co-relate OI with futures and options.

So, open interest is more like an accumulated figure, whereas volume represents data only for the current day. Sometimes, volume can be equal to or even greater than open interest, especially in case of contracts that are not so liquid. Besides using Option Chain to identify areas of support and resistance, it can also be used to find out the implications of shifts in support and resistance,as and when they occur. The direction in which support and resistance are moving tells a lot about the overall direction of the underlying instrument. To do this, one must monitor the changes in OI tab for both Calls and Puts.

One must always compare open interest with price to understand the strength of the move. Let us now take the example of Bajaj Finance, which is a stock that is a part of the Nifty index and also has decent activity in the Options segment. In the above Option Chain of Reliance Industries, notice that in case of Calls, maximum writing is at 1500 followed by 1600; whereas in case of Put, maximum writing is at 1440 followed by 1400. Break below 1440 would open door for further fall towards the 1400; whereas break above 1500 would open door for a rally towards the next hurdle of 1600. The book’s first part covers option Greeks like Delta, Gamma, Theta, Vega, Delta hedging, and Gamma scalping implied volatility and the basics of Futures and Options. If the strategy is executed in a proper way, it can even make holding the stock portfolio free of cost.

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