[Nitin Bhatia]

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Option Chain Intraday Trading Strategy is based on very simple logic and rational. The key two key rules of the option chain analysis are used in this strategy

1. The option writers prefer to SELL or Write or Short the ATM (At The Money) or near ATM options contract for maximum profit. Whereas, the option buyer will prefer to buy a far OTM (Out of Money) option contracts. For example, if the market is trading near 9500 then i will prefer to write 9500 CE or 9000 PE if my view is bearish on the market.

2. If a trader or investor’s view is bearish on the market then he or she can either write a call or buy put. Similarly, if the view is bullish then either i can write a put or buy the call options contract.

Now as a trader, I will check the data of Most active Calls and Most active Puts on the NSE website for nifty. If the most active calls are near ATM i.e. near the strike price at which Nifty is trading then it is call writing. You should confirm this data with the Most active Put option contracts. If there is PUT buying at far OTM then it implies that the Put buyers are ACTIVE this confirms the bearish view.

This Option Chain Intraday Trading Strategy normally does not work on the day of expiry or when the market is range-bound i.e. when both bulls and bears try to control the stock market.

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