So last week 39000 Monthly straddle seller told us that market is going up. Had posted one small tweet on the same on 12/10 also. Now how to use different straddle to analyse the market moves and SL/Resistance/Support. Lets start
First and Foremost, we have to choose Round Number Straddle like 38500/39500/40000. While choosing the straddle try to pick one bullish straddle and one bearish straddle of almost equidistant from current strike. Like last close on BNF was 39408,
So we will take 38500 straddle(bullish straddle) and 40000 straddle(bearish straddle). And also one we will take 39500 (ATM Straddle) to gauge the market moves. We are in uptrend, no question on it, but we can go down anyday also. And these three straddle will help us to identify
the congested market (39500), bullish market (38500) and bearish market moves(40000). How to do this ?? Very simple, you just need to draw few lines on 15m or 30m or 60m TF and follow those. These few lines and prices will be visible on chart today & we have to follow those daily
Lets start will bullish straddle (38500). As we know that 38500 straddle will have 38500CE(ITM) + 38500 PE(OTM) as its constituents, so by default the straddle price should go up or remain in range, then we can say that BNF will remain in uptrend. With every passing day there
will be more fall in 38500 PE prices(OTM) then 38500CE prices and hence it will remain as uptrending or congested but not downtrending chart. Lets mark those important levels on hourly chart
This straddle trading at 1390 has 38500ce value at 1150 and 38500 pe at 238, so with BNF trading at 39408, the true value of straddle will be 39408-38500 = 908, so this excess value of 482 is mainly driven by PE value of 238 points and hence till this straddle remains above 1100
level, expect BNF to stay here only with small moves. For any big downmove this straddle will have to fall below 1000, till then expect BNF to be here only. Also one observation from the chart, the straddle traded at 1450 on 6/10 & 7/10, and once this straddle crosses 1450 expect
more upside in BNF.
Now lets go to 39500 straddle (ATM straddle), having least intrinsic value. Its trading at 1120,with 39500CE valued at 528 & 39500 PE at 608. The true value of the straddle will be 39500-39408 = 92 points, so the rest 1020 points is full gas. So if someone
Now lets go to 39500 straddle (ATM straddle), having least intrinsic value. Its trading at 1120,with 39500CE valued at 528 & 39500 PE at 608. The true value of the straddle will be 39500-39408 = 92 points, so the rest 1020 points is full gas. So if someone
is selling this straddle today then he will be in profit till BNF expiry between 40600-38400 in this Oct Expiry. With almost 95% as the gas for the straddle expect this straddle to be a downward moving chart only.
Even for a 200-300 pointer move on BNF in either direction,
Even for a 200-300 pointer move on BNF in either direction,
expect this straddle to be downward slopping only.
Now lets got to the Bearish straddle of 40000 at CMP of 1230, with 40000 PE priced at 905 and 40000CE at 320. Here the fair value of straddle is 40000-39408 = 600, so its 50% gas and 50% value. Now if the BNF stays here or gives
Now lets got to the Bearish straddle of 40000 at CMP of 1230, with 40000 PE priced at 905 and 40000CE at 320. Here the fair value of straddle is 40000-39408 = 600, so its 50% gas and 50% value. Now if the BNF stays here or gives
small moves of 100-200 points on either side then the gas part of 600 points will take care of the BNF moves but if the BNF has to fall big, then this straddle will also start to reverse and make high from marked levels of 1400. We are in uptrending market, so whenever this
straddle crosses 1450, the last day high, expect good downside moves in BNF. Here goes the chart
Last week also i posted few straddle chart and marked some levels and all these levels are clearly visible with naked eye without use of any fancy indicator. Trust me, you dont need to learn many things to trade market, you need to learn few things and learn them well.
Use proper risk reward and plan your trades in advance. And at last act as per those plan. Half of the journey will be won.
Happy and safe trading
Happy and safe trading
Loading suggestions...