Secret Swing Trading Strategy

Forums F&O Option Chain Analysis relation between iv and demand of option

Viewing 9 reply threads
  • Author
    Posts
    • #209572
      Nitin Bhatia
      Keymaster

        sir,whenever there is sudden heavy demand increse of any perticular option(either long side or short side) there is increse in iv……and whenever there is sudden heavy distribution of any option (either longed contracts or short contracts) there is decrese in iv of that perticular option …..is this rule right?and if that is not right than what is the right logic???….thank u in advance….

      • #210690
        Nitin Bhatia
        Keymaster

          hi actually iv increases when buying demand more whether call or put.. and due to put call parity opposite side iv also impacted.

        • #210764
          Nitin Bhatia
          Keymaster

            when standard deviation of option price increases its IV increases when demand or supply but need some clarifiaction from other member if they can throw light.

          • #210834
            Nitin Bhatia
            Keymaster

              This is right Rule , what is IV? this is demand and supply rule. if there is big fish then there shall be small fish too. however when big fish is working there can not be big change in IV as number of contract will be high and volume will be less. IV need rapid price change to be done.

              unless there is price change there will not be IV change. keep this in mind and figure out who are working retailer or big player.

            • #212077
              Nitin Bhatia
              Keymaster

                Yes according to my analysis you are almost right….. But also you have to consider other factors like O. I. , change in O. I., Volume and Greeks . For accurate analysis because N. B. sir alaways said option chain is 360 degree analysis..

              • #222428
                Nitin Bhatia
                Keymaster

                  yes but you need to confirms only when it mixed with volume i.e whether volume is increasing or reducing.

                • #222960
                  Nitin Bhatia
                  Keymaster

                    Implied volatility is directly influenced by the supply and demand of the underlying options and by the market’s expectation of the share price’s direction. As expectations rise, or as the demand for an option increases, implied volatility will rise. Options that have high levels of implied volatility will result in high-priced option premiums.

                  • #285828
                    Nitin Bhatia
                    Keymaster

                      As per my understanding iv increase
                      1. when there the demand of particular option is increased.
                      2. When writers are fearful about market direction. So they quote high premium of option. This phenomenon also increase Iv.

                      This is my understanding.

                    • #286999
                      Nitin Bhatia
                      Keymaster

                        OI increasing means money flow increased and IV increased trend continue whether up or down. OI increasing and IV Decreasing trend may level off. and OI(money flow) decreasing with IV decreasing (You can also consider premium Decay), here is Trend reversal.

                        Volume analysis with change in OI can find big player.

                      • #292661
                        Nitin Bhatia
                        Keymaster

                          iv correlate with fresh position and existing position…. when put writing fresh position, iv increases with market goes up… but while those writing position closing again iv increase but this time market going down…. recently live streaming nitin sir told us…

                      Viewing 9 reply threads
                      • You must be logged in to reply to this topic.
                      Scroll to Top