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There is only subtraction used in this analysis.
You need to understand the logic behind it, What does Premium Decay mean.
I suggest try to prepare that excel sheet by your own, then you will be able to relate it, which Premium is decayed on concerned strike price.
On some bad day it may confuse you, but believe me its not Rocket Science. Its simple logic.Unwinding of position does not necessarily mean that it is done by big player. It can be by retail investors also if their stop loss is hit. You have to check the smart money flow and then decide who is unwinding? If big player is unwinding then definitely it will impact IV and Premium.
I shared a video on how to find correlation coefficient between the IV and the stock price. IV may increase or decrease.
It will be good if interest rates come down and it is bad if the interest rates goes up (In this case, it will hit the profitability).
In my opinion, SBI thinks that interest rate will not go up for atleast next few years & it will increase their profitability if the interest rates are low thus they have taken this calculated risk.
1. Based on IV system alert
2. Alert comes early
3. There is no standard rule. It depends on IV. I explained in one of the options chain video.
4. During stop loss hunting, No major change in key option chain parameters.
5. You cannot predict stop loss hunting very early…I use it to average out my position.Sometimes it’s for time being and sometimes its long term positions you can conclude based on volume but as per rule its Long position
Dear uspljacs
My question is in general sense not for current situation.
If call oi increase aggressively relative to volume in particular time period during intraday, and at that time iv and premium also increase then should we conclude that call are bought by big playersYou cant conclude based on IV increase or decrease or open interest increased or decreased. you need to view the following parameter to understand the position better.
1. Correlation with Index and Vix
2. Correlation with Implied Volatility
3. Option Chain
4. Position On Chart
5. Volume Candle
6. Market Sentiment ( FII Sentiment)
7. Awaiting for Exit Poll Result Nifty may High Volatile
8. Premium Decay
As this week is news based week we can see both side movement.Yesterday Day end Volume Candle is Negative (red) and there is a very low delivery percentage on Nifty and Bank Nifty. Also observed There is less premium decay in Put options. Correlation is also Strong negative and there is a weak co-relation between Vix and Index. my learning is In current week market is in Bearish sentiment with Cautious Approach Not seen much volume despite high premium ( this time it’s new learning for me) suggest me if I am wrong in any of above observation.
Thanks a lot for reverting..
You are right, I can prepare,Saw this video 3 times, only CONCERN IS THE FORMULA, WHICH MAY GO WRONG..So request Nitinji, you and all fellow learners..Those who downloaded it then..KINDLY SHARE THE EXCELSHEET,..Shall be greatful..
Nitinji KINDLY REVERT..
u can create watch Nitin sir video
https://www.youtube.com/watch?v=bbm-apjUFlQAnd one more thing sir agar puts ke premium kafi high hote hain to yahan 2 case hote hain
1- put writers ko dar h ki market yahan se niche ja sakta h
2- wahan put writing continuous ho ri h isliye wo high premiums par apna mal put buyers ko chipka rahe hain isliye premiums high hain.
Dono hi case contradictory hainplease help because i had and still searching on internet and try to find relation of quantum physic and stock market but i didn’t find enough informative data on internet …..
1-Undelying price
2-strike price
3-Implied volatility
4-Risk free interest rate
5-Dividend yield(NA for nifty)
6-Time to expairy
