[Nitin Bhatia]

Sir,

If the stock price is at 52wk high which is around the strong resistance point, RSI is also in oversold zone and there is significant OI built up on ITM put options and with the help of COI/Volume it seems that smart money is working here so can we conclude it as option writing only because the premiums are very high and price will definitely move up breaking it’s resistance or it can be option buying in any case?

[Nitin Bhatia]

significant OI built up on ITM put options is fine but you should check Option Price also…

If Option Price is also increasing then its Long Built up. And if,
option price is decreasing then its option writing.

You should also gauge IV as well.
Are Writers scary…? while writing those options or not…

After that only you can conclude that’s Option Writing at ITM Put in your stock/Index is done by Smart Money Or Not.

My friendly suggestion: create 2 individual stories based on Option Chain & based on Technical Analysis via Sir’s 6 hats method.
Don’t mix 1st Analysis conclusion to 2nd Analysis. Your mind might get biased bcoz of that while doing 2nd Analysis.

And that’s the major reason I respect Nitin Sir…
Bcoz any one can read books any one can do analysis but that unbiased state of mind is very very very crucial.

[Nitin Bhatia]

I think here we need to see if OI, and Premium is going up then definitely its long position, IV should ideally decrease here. If OI is increasing, Premium is going down and IV increasing then definitely short position. I read somewhere that generally it is better to avoid shorting ITM options as ITM options are most likely do not expire worthless. But not sure if big players follow this theory. Guys I am still learning so any mistake please point that out.

[Nitin Bhatia]

Dear Akshay
all points mentioned by u is really appreciable but one thing has little bit concern is that as u said If Option Price is also increasing then its Long Built up. And if,
option price is decreasing then its option writing
this is reactive approach if we wanna profitable in the market we have to be proactive
in this my experience is built up on in the money is writing or misleading approach by smart money(bade munafe ke liye chota loss) or a strategy done by the professionals.

[Nitin Bhatia]

i see RSI is favour of Buying and Stock is accumulation zone.
But i see long Deep In-the-MONEY option writing for that stock.
Unable to confirm big player movement.

My conclusion – based on RSI & Delivery % i see stock can give up move at any point of time however when i see PUT writing which is deep IN-The-Money which confuses me weather big players going long on Put writing (Deep in the money) which is berish sign. However i see that stock should go up based on accumulation and RSI analysis.
Any view helping in understanding big players movement will be appreciated or understanding why Deep-in-the money PUT contract is written?

[Nitin Bhatia]

You have not mentioned the stock name. Besides the points mentioned by other members, just to add that you also need to check the futures data and the strength of bears in option chain. There is a possibility of Hedging.

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