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OPTIONS SCALPING OFFLINE WEBINAR REFRESHER DOCUMENT Compiled Notes of Mr. Sivakumar Jayachandran's Training Sessions
DISCLAIMER
Mr. Sivakumar Jayachandran (Siva) is not a SEBI Registered Advisor. This document, WhatsApp groups and the Telegram channel is purely for educational purpose only. No claims are being made on the document content or images or quotes for copyrights. This document is a refresher document for the benefit of the traders who are learning to improve their trading methodology. No claims or guarantees of returns of investment in the equity markets or derivatives are made in this document. This document will be helpful for learning concepts. Please practice risk management and capital protection as per advice of your financial advisor. Siva is not responsible for your decisions and investments, profit and loss in equity and derivatives markets. Please consult and confirm with your investment and financial advisor for all trades and investments.
TABLE OF CONTENTS
I. INTRODUCTION Trading Framework
1 3
PREPARE FOR TRADING Global Indices Crude USD:INR Charts Analysis Buy/Sell Analysis NSE Website OI Spurts VIX Individual stocks
3 3 3 3 4 4 4 4
II. PLAN WITH INDICATORS
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RSI Open Interest SuperTrend VWAP Volume Parabolic SAR (PSAR) Candle Stick Patterns How to select Strike Price? Implied Volatility (IVs) OI Spurts
6 7 7 7 7 7 8 10 10 11
III. EXECUTE THE PLAN
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Gap-Up Gap-Down Trend Day (Up or Down) Sideways Day
12 12 12 12
WHAT IS A GOOD PRICE FOR AN OPTION?
10
IV. PLAN FOR WEEKLY EXPIRY Example: February 24th Example: February 25th Example: February 26th
13 14 15
V. ANNEXURE About Siva About Training About Trading About Psychology of Trader
OPTIONS SCALPING REFRESHER DOCUMENT
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OPTIONS SCALPING REFRESHER
Introduction Options originated as a hedging mechanism. Hedging is protection against any unexpected event or outcome. Large institutional traders have to hedge their positions in equity with options, so if there is an anticipation that stocks could fall (due to external events or company specific reason), institutions buy put options to protect their capital and equity positions when their stops are hit, in a falling market. Likewise, in a market which is going up, and stock price is expected to go up, call options are bought to take advantage of the rise. Options can also be shorted and squared off like any other equities. This options and futures segment is called equity derivatives (F&O). In addition, there are several advanced option strategies like Iron Condor, Butterfly, Bull Call Spread, Put Call Spread etc. which are employed by advanced traders. The advanced strategies are outside the scope of this refresher document.
Options can be bought or sold. Option Sellers are called writers (Call writers or Put writers). Option buyers buy options(Calls (CE) or Puts(PE)) when writers offer them the option contracts. When premiums are low or IVs are low, writers may not choose to write options (call or puts). Buyers can square off intra-day, or carry positions until expiry (weekly or monthly). Options are of three types: a) In the Money, b) At the Money c) Out of the Money. If the underlying price is above the strike price, then the CALL option is said to be In the Money. If the underlying price is below the strike price, then the PUT option is said to be In the Money. ITM and ATM are suited for option buying. Siva opines that OTM are Out of the Market! and not to be traded regularly.
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In the above option chain table, yellow marked ones / highlighted ones are in the money (ITM). Learn options trading at the following links: https://www.investopedia.com/options-trading-strategy-and-education-4689661 https://zerodha.com/varsity/module/option-theory/
The core of Siva’s trading approach is to execute quick trades within a span of few minutes to enter and exit in the strike price option through buying(entry) and selling(exit). Siva doesn’t encourage carrying positions especially in markets where unforeseen events increase volatility beyond anticipation. It is recommended to read the chart well with the indicators and form a view based on macros (global indices, news, FII and DII buy/sell behavior) and then execute the plan. Simply put, it is to Prepare, Plan and Execute. In addition this scalping approach could be utilized not just for BankNifty, but to Nifty, and other stocks which are liquid (such as of Nifty 50) and have volumes with movements which can help take trades.
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Trading Framework Let us briefly discuss each element in the framework.
PREPARE 1. Global Indices such as S&P 500, DJIA (DOW 30, like our Sensex), CAC, DAX, HANGSENG, SHANGAI and SGX Nifty are important ones to track. Around 130PM India time, its important to track Europe markets for trends and macro indications. Around 3PM, its important to check movements in DOW Futures for possible 3PM moves or closing moves. 2. Crude is important for India and its economy as 80% approx.. is imported. Hence, any increase in price, leads to inflation and can cause rate increases and increased cost of business which is negative for businesses and banks. Crude price should be low but there are some instances where crude prices become low due to less demand due to trade war, disease outbreaks, natural calamities. This reduction in oil demand is again negative as reduced consumption of resources, leads to reduced business growth. 3. USD:INR The rate should be stable without any wild movements. More rupees for each dollar, IT stocks would be earnings positive, but for imports of crude and any other raw materials and / or semi-finished goods, businesses would need more rupees per dollar to get the same material. Hence, the inverse relation of Bank stocks with IT stocks. If IT is up, Banks go down and vice versa. A strong rupee is a good sign of a strong economy, in general. When FIIs sell, they encash dollars, When FIIs buy, they spend dollars. More dollars in supply, less its value, less dollars in supply, more its value. 4. Charts Analysis of previous day is useful for patterns, volumes, open interest, momentum etc. at 3 minute, 15minute, 1hr, 4hr and 1 day time frames.
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5. Derivative Buy/Sell Analysis in ICICI Direct site. In this site, a 15minute/30minute wise analysis is given of buy/sell behavior such as Short Covering, Short Buildup, Long Unwinding, Long Buildup etc. It also shows the OI and change in OI (as in contracts). 6. NSE Website OI Spurts shows the same information at an aggregate level: Rise in OI-Rise in Price (Long Buildup) Rise in OI-Slide in Price (Short Build Up) Slide in OI-Rise in Price (Short Covering) Slide in OI-Slide in Price (Long Liquidation) 7. VIX – This is the volatility index. For the US markets, it is the S&P 500 VIX, which is traded as well. For India market, it is India VIX, this index is not traded. India VIX has ranged 10+ to about 45+. As of Feb 26th, it is 18.26 which is a 8% increase over previous day. As of March 9th, India VIX is 30.8 which is a 21% increase over previous day. Growing VIX indicates bearishness and high volatility. There could be violent moves either side, but a higher VIX keeps index spot price rise in check. It's rise is helpful for bears and fall for bulls in general. 8. Individual stocks behavior in Indices. Its important to understand individual stocks price movement within the indices. Lets examine for NIFTY and BANKNIFTY. a) NIFTY: This is a collection of 50 stocks across major business sectors.
Please note the key stocks Reliance, HDFC Bank, HDFC, ICICI Bank, TCS, ITC, L&T etc., price movements define the movement of NIFTY. Typically a change of 2% to 5% in a major stock will be a big move.
Markets are not casino, have the discipline and knowledge to enter. Do not believe in stock and levels tips services. They give entry levels to retail so that they or their clients can exit. Do not take personal loans for funding capital. Do not develop a bias for the market or trend. Respond to market moves, but do not predict, trade and pray.
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Let's calculate: Lets say, HDFC Bank moves up by 2% on a good day. That itself can push NIFTY up by 25 points. Assuming 1 lot 75 Qty, that translates to 75*25 = Rs. 1875 which is more than the CMP of HDFC Bank of Rs. 1193. That is the power of options and heavy weight stocks like HDFC, Reliance etc. Also to be noted is that due to sectoral rotation, there will be some sectors which rise in prices, and some which fall, some day. So it’s the overall blended effect that matters. Following is the movement of NIFTY over the years:
b) NIFTY BANK: The NIFTY Bank Index comprises of the most liquid and large Indian Banking stocks. The Index comprises of maximum 12 bank companies listed on the NSE.
A similar 2% increase in price of HDFC Bank can lead to a 165 point increase in NIFTY BANK at CMP of 30500. Of all the sectoral indices, NIFTYBANK has given better returns since inception and is highly liquid and indicative of Indian economy, hence Siva’s preference to NIFTYBANK for trading options.
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The below chart shows the movement of BANKNIFTY over the years.
So the best way to analyze indices is through its constituent companies and their growth or fall in % terms and their impact on the index. Quarterly results, positive or negative news , of economy or government decisions, RBI rate changes etc., can trigger rallies or risk offs or breakdowns. This analysis completes the step 1 of the trading preparation. Next step is to PLAN for the trading session. It's a Myth that only Option Sellers make money. Option Buyers have limited risk. In Scalping, Enter and Exit in few minutes or max 10 minutes. Do more trades depending on your setup and entry/exit criteria. Leverage is not important. Platform and Techniques are important.Take test trades (with less quantity - 1 lot) to check whether your understanding is correct.
PLAN Once we are prepared, now let’s plan for the trading session. We need to have a setup with the right tool, trading platform and chart setup. Siva recommends TradeSmart 3999 Plan with NEST desktop version for trading (details in Annexure). It is also strongly suggested to use Siva’s Option Scalping tool with its dashboard and OI analysis sheets which shows cross overs and change in OI/Price movements of Call and Put options. For charting of BankNifty futures or Nifty futures, any tool with the below settings is recommended, explained individually, item wise. a) RSI (Relative Strength Index, 14): Setting: 20 to 80. RSI indicates the strength for an up move or downmove. RSI indicates the momentum and is an oscillator.
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b) Open Interest: OI indicates the interest among buyers or sellers on either side. The important metric is change in OI which is useful for determining the movement of the underlying price (futures or spot). Open Interest could include OI of weekly expiry / monthly expiry etc. The important numbers to track are around 500k+ to 1.5mn+ OI and changes to OI. Kite by Zerodha or Chartink or Tradingview are some good options for charting. c) SuperTrend: Setting 10,2 for 3 min time frame. SuperTrend is a trend-following indicator . On the chart, its easy to identify as a vertical multiple green arrows up or vertical multiple red arrows down. Its important not to blindly follow SuperTrend as it needs to be correlated with RSI, Volume and Followup candles. There could be false breakouts and false breakdowns. Tip: In a trending or sideways move, the first time price candle wick hits SuperTrend line, it takes support ( while falling) / resistance (while going up) accordingly.
d) VWAP: Volume Weighted Average Price is the ratio of the value traded to total volume traded over a particular time horizon (usually one day). VWAP is similar to a moving average in that when price is above VWAP, prices are rising and when price is below VWAP, prices are falling.
Tip: VWAP is a lagging indicator. For charting at 915am or in the first few hours, analyze using previous day’s VWAP and not the current days VWAP. This is required to eliminate any bias due to current days VWAP line.
e) Volume: For NiftyBank a volume of 50k and for Nifty, a volume of 100k is decisive per candle. Also important is the 2nd followup candle to indicate trend and direction confirmation. Without followup candles, there could be false breakouts. Advanced technical analysis on candles is out of scope for this document. f) Parabolic SAR: (PSAR) Setting 0.02, 0.2 The parabolic stop and reverse (PSAR) indicator Is a tool to find price reversals which can be utilized as stop-loss levels as well as trade triggers. The indicator is composed of a series of dots, either above or below the price. When dots move from below to above the price bars, it is time to get out of longs or get short.
Tip: The more gap between the PSAR dots and the price, the more is the scope for making money, upside and downside. Consider this gap with the SuperTrend and VWAP lines.
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Candle Stick Patterns
Candlestick patterns are beyond the scope of this document but a collection of candle stick patterns for general idea is given below.
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Tip: OI data is GOD, learn the interpretation well and use the Option Scalping tool. See the levels where writers are busy. Check levels ITM or ATM for entry. Sideways market is good for trading as you can understand the levels better with support and resistance, levels between VWAP-SuperTrend etc.
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How to select strike for trading ? In the option chain, select strike prices near the max pain area (where the spot price is hovering). Range will be 3 strikes above and below. Keep a 500 point broad range to analyse OI and IVs. On expiry days, it is suggested to trade in ITMs. On other days, can take OTM (only with conviction) or ATM, depending on anticipation of events or trends. Usually trades between VWAP and SuperTrend range can be executed but this cannot be taken in isolation.
What is a good price for an option ? For CALL: Spot – Strike Let’s assume, BankNifty Spot is 30080 and 30000 CE price is at 150. Actually the price of the call option should be 80, but as it is at 150, it is overvalued (Premium is high). If we buy the call option at 150, then we would need more than 100 point bounce to Break even Point (BEP). Writers like these over-valued strikes for premium erosion. For PUT: Strike – Spot Let’s assume, BankNifty Spot is 30080 and 30100PE price is at 20. This option price is priced just about right and there is no premium left for writers to write or for premium erosion. Hence, writers may not be interested for adding volumes in this strike price, BUT dependent on Spot price movements. More information: https://www.investopedia.com/articles/active-trading/021014/options-basics-howpick-right-strike-price.asp
Implied Volatility (IVs) Implied volatility is a metric that captures the market's view of the likelihood of changes in a given option's price. It shows the market's opinion of the option's potential moves, but it doesn't forecast direction. If the implied volatility is high, the market thinks the option has potential for large price swings in either direction, just as low IV implies the option will not move as much by option expiration.
For more information: https://www.investopedia.com/ask/answers/062415/how-does-implied-volatilityimpact-pricing-options.asp
Tip: Tuesdays and Wednesdays post 2PM, IVs tend to be higher, so ITMs are better to trade. IVs play an important role in expiry and writers need premium, if premium is not interesting, writers will not be interested. Also keep a tab on the adjusted close prices of the options.
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OI Spurts Previously we detailed the 4 scenarios of OI spurts. To repeat, Rise in OI - Rise in Price (Long Buildup), Rise in OI - Slide in Price (Short Build Up), Slide in OI - Rise in Price (Short Covering), Slide in OI - Slide in Price (Long Liquidation). Source for the below section is from Zerodha Varsity. Thanks to Zerodha.
The following tables summarizes the trader’s perspective with respect to changes in volume and prices.
Unlike volumes, the change in Open interest does not really convey any directional view on markets. However, it does give a sense of strength between bullish and bearish positions. The following tables summarizes the trader’s perspective with respect to changes in the OI and prices.
Do note, if there is an abnormally high OI backed by a rapid increase or decrease in prices then be cautious. This situation simply means that there is a lot of euphoria and leverage being built up in the market. In situations like this, even a small trigger could lead to a lot of panic in the market. Source for the above section was from Zerodha Varsity. Thanks to Zerodha.
Tip: Price increase and Open Interest decrease due to short covering could happen even during liquidation. Both bears exiting and some of the bulls could be exiting. This is different from Long Liquidation (Quadrant 4), where Price and Open Interest both fall.
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Let's summarise the relation between Price, Volume and Open Interest now:
EXECUTE THE PLAN Once you have formed a market view, index view, constituent stocks view, strike prices identification and chart setup, its time to execute the plans.The scenarios could be: 1. Gap-Up: Based on a positive news post market, the market could open higher, its known in the pre-open rates at 9:09AM. Usually, unless the news is strong and RSI and Volumes are strong, there could be a sell off at the highs, also known as ‘Sell on Rise’. Please note, intra day high, previous day high, previous day low, and previous day’s VWAP for the first 2 hours of trading. 2. Gap-Down: Based on a negative news post market, the market could open lower and unless the news is strong (negative) and RSI is low and volumes are weak, there could be a pull back. This is also known as 'Buy on Dip'. Watch related indices and stock prices for correlating the moves. 3. Trend Day: A clear up side or downside move consistently giving new highs or new lows every 15mins or 30mins is a trend day. 4. Sideways Day: A range bound movement with alternating SuperTrend, VWAP and PSAR is a rangebound side ways trading day. There could be a zone where there could be a sell off or a breakout during the day. A perfect day for the well trained option buyer.
Tip: When in doubt, do not trade. When your profit target is reached, do not trade. Do not be a compulsive trader. Place limit orders and trail the stop loss for profits. Please do not carry overnight positions unless you are a positional trader. Option Buying with overnight positions is injurious to your wealth and stressful to your health.
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PLAN FOR WEEKLY EXPIRY For Thursday Weekly Expiry, we have to analyze the max pain strikes in the option chain and prior to that complete all the steps of ‘Prepare’ and ‘Plan’ in the Trading Framework. For this exercise, lets analyze the week of February 24th to February 26th for the expiry of BankNifty February of 27th. Also please note that this week was affected by the Corona Virus global emergence and Feb 21st was a trading holiday. Trump visited India, there were many global cues.
First lets identify the BankNifty closing of the days (purple mark), Feb 20th, Feb 24th, Feb 25th, Feb 26th. At a high level view, if you notice, Feb 20 to 24, Price decreased and volume decreased, From 24 to 25, price decreased and volume decreased, from 25 to 26, price decreased, volume increased and finally from 26 to 27, price decreased and volume increased on expiry.
February 24th – 30455, So lets look at 30400CE and 30500PE Strikes 30400CE
24th to 25th – Price decrease, OI increase – Quadrant 2 – Short Buildup 25th to 26th – Price decrease, OI increase – Quadrant 2 – Short Buildup (Notice the almost 350% increase in OI)
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26th to 27th – What happened ? OTM expired to 10 paisa.
February 24th – 30455, So lets look at 30400CE and 30500PE Strikes 30500PE
24th to 25th – Price decrease, OI increase – Quadrant 2 – Short Buildup 25th to 26th – Price increase, OI decrease – Quadrant 3 – Short Covering and Long Liquidation. 26th to 27th – What Happened ? Price increase and In the money(ITM) Expiry.
February 25th – 30432 - So let’s look at 30400CE and 30500PE, same analysis as above. February 26th – 30306 – So let’s look at 30300CE and 30400PE. 30300CE
24th to 25th – Price Decrease, OI Increase – Short Buildup Quadrant 2. 25th to 26th – Price Decrease, OI Increase – Short Buildup Quadrant 2. 27th Expiry – What Happened ? OTM Expired to 5 paisa.
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30400PE
24th to 25th – Price decrease, OI Increase – Quadrant 2 – Short Buildup. 25th to 26th – Price Increase, OI Decrease – Short Covering and Liquidation – Quadrant 3. 27th – Expiry what happened ? ITM, Price increase.
So how does the above analysis help? First we are checking the price and volume in the historical data of the BankNifty closing and then we are checking specific strike prices (ITM) on both the CE and PE side to perform the analysis and make the inferences. For monthly expiry, we have to collate all the month data. Please note that this also includes possibilities of position rollovers hence is a complicated.
Tip: Try to use previous day or previous session profit as stop loss. OR 10% of capital deployed. Cut down your positions as the trading day progresses unless setup is favorable and risk can be taken. Do not be a compulsive trader. Strengthen your psychology and be humble when you profit and keep calm when in loss. Give back to society - share knowledge, clear doubts of other traders.
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ANNEXURE Q&A ABOUT SIVA
1. I want to know more about Mr. Sivakumar Jayachandran. Any links to Bio? 2. Why Siva doesn’t trade equity stocks cash segment ? 3. What are Siva’s after trading hobbies ?
ABOUT TRAINING
4. Where can I get recording of Siva’s webinars ? 5. Is Tradesmart account mandatory ? Can we trade with our app of choice? 6. How to join / migrate to Tradesmart Rs. 3999/month plan ? 7. How does brokerage matter ? 8. I want to join Siva’s next paid webinar. How can I ? 9. I want to join Siva’s next free webinar. How can I ? 10. What will I learn in the webinars ? 11. Can I talk directly with Siva ?
ABOUT TRADING
12. I am a newbie / beginner in trading. Where should I start ? 13. I want to understand option scalping strategy ? 14. I heard option selling is more profitable than option buying. Is it correct ? 15. Which equity derivatives and equity does Siva trade ? 16. Which trading App should I use for Option Trading / Scalping ? 17. How do I get world view and India view before trade begins ? 18. How do I get the automated OI sheet for BANKNIFTY AND NIFTY? 19. What are the common settings for indicators / oscillators in the charts ? 20. What should be my stop loss ? 21. How much capital should I set aside for Option Trading ? 22. How much capital should I use for trading each day? 23. How many computer systems and screens I should have ? What is Siva's system setup?
ABOUT PSYCHOLOGY OF TRADER
24. I have lot of loans and need money quickly to repay EMIs. What should be my approach ? 25. When should I not trade ? 26. When should I stop trade ?
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1. I want to know more about Mr. Sivakumar Jayachandran. Any links to Bio?
Originally from Chennai, and based out of Bangalore, Mr. Sivakumar Jayachandran (Siva) studied hotel management and pursued his passion in the Healthcare I.T Industry, setup a BPO and then exited with 4x multiple (300% growth for investors). Siva then turned towards the India equity market as the next growth story and after initial setbacks, has not looked back since. Please read the full interview at CNBC: https://www.cnbctv18.com/entrepreneurship/sivakumar-jayachandran-journey-of-abpo-employee-to-a-star-trader-4484421.htm Mobile: 7829061536 (WhatsApp) Twitter: @justsiva123 Telegram: t.me/OptionsScalping 2. Why Siva doesn’t trade equity stocks cash segment ?
Siva opines that NIFTY or the broad Indian equities have high price earnings multiples and are not in investment range. Once the PEs are attractive, he may consider investments. Siva currently invests in a bit of gold and real estate. Readers can have a bird’s eye view of NIFTY PE at the following link: https://nifty-pe-ratio.com/ 3. What are Siva’s after trading hobbies ?
Siva is just like any normal person after trading / office hours. Loves to travel, listen to music and goes for long drives in weekends in his favorite BMW / JEEP SUV on the interstate. 4. Where can I get recording of Siva’s webinars ?
No, you cannot get recording of his webinars, as his webinars are never recorded. As Siva shares his desktop and trading terminals with personal information, recording of webinars is not provided. Any screen recording of webinars by participants(whether paid or free) is prohibited and is against the spirit of training. Please respect Siva’s viewpoint in this regard. No recordings please. 5. Is Tradesmart account mandatory ? Can we trade with our app of choice?
You can trade with any app of any platform of your choice. Tradesmart is not mandatory. However Siva opines that Tradesmart has better support, customer service and the technical strength to handle robust trading with very less downtime. If you are desirous of opening an account with Tradesmart, please click the following link for Rs. 15/order plan. https://tradesmartonline.in/?referrer_id=YKAS146 and then migrate to the Rs. 3999 plan if you are a heavy trader.
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6, How to join / migrate to Tradesmart Rs. 3999/month plan ?
First you have to open a regular trading account with TradeSmart with the link / referral ID as above (Ans 5.) Then, You can migrate to the 3999/month plan from 15/order plan by sending an email to [email protected] and cc [email protected] with the following message in the body of the email and NOT as attachment. Request for Change of Brokerage plan To VNS Finance & Capital Services Ltd 401-402, A Wing, Mangalya, Marol Maroshi Road, Near Marol Fire Station, Andheri East, Mumbai 400 059. Sub: Request for change of Brokerage Plan for Client ID________________ I, ______________________________ having internet trading account with you for NSE/BSE with Unique Client Code: __________ do wish to change my brokerage plan as given below:
Please do the needful. Yours Faithfully, Client’s Name Client’s VNS Unique Client Code: _____________
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7. How does brokerage matter ?
Every trader should keep in mind before choosing a broker and these are the key parameters someone should pre-check before opening up a trading account First and the fore most is the software and the comfort of working on the same with ease Most of the traders get mis-guided by the huge margins being provided but again trading on huge margins probability losing out the capital quick How much we pay for each trade is more important as it directly impacts the profit most importantly paying brokerage from profits are OK but imagine paying high brokerage even on losses Many don’t even look at the contract notes every day If the broker provides an APP as we may trade at times on the move too Also one should check if they have call and trade facility Capacity - there are a few brokers with huge customer base always has a problem on big days and that’s where we get chances to make big money. Also as they have huge customer base most of the times it gets slower when loaded fully. Some brokers do not allow to pick OTM strikes , which again making huge profits through those calls gets affected There are people who pay even 150 Rs for buying options per lot, god knows how they make profits. Also a few people say they pay a 0.7% and if they look at the contract note , they will know how much they spend out. Though I have about 7 to 8 brokers , I have always used Trade Smart as my primary broker which is not only cost effective but also very much user friendly. Most of the traders just to avoid brokerage , instead of pyramiding at bottoms or tops , they buy at one go just to avoid small brokerages. A retail trader on my experience trades about 10 to 15 entries. Even 10 entries 10 * 20rs per day. 200rs * 22trading days is easy 4500. In the unlimited 3999 plan u can trade as many as you, Be Smart and Trade Smart... 8. I want to join Siva’s next paid webinar. How can I ? Please keep following the Telegram channel for the dates and process for enrolment. Seats get filled fast, usually 2-3 weeks before the actual date of the webinar. 9. I want to join Siva’s next free webinar. How can I ? Please keep following the Telegram channel for the dates and process for enrolment. Seats get filled fast, usually 3 weeks before the actual date of the webinar.
10. What will I learn in the webinars ? How to trade, how to place trailing SL, charts, how to read OI, when to take trade and not to take. How to trade on expiry days etc.. 11. Can I talk directly with Siva ? Yes, you can message him at the details given above and call with prior information and approval of time. Please respect Siva’s time for phone calls and the best way to reach him is to DM on Telegram or WhatsApp.
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12. I am a newbie / beginner in trading. Where should I start ? Start your understanding by following the index charts and price movement on the option chain excel sheet or on the NSE India website. Trade only in 1 lot until you understand movement of call and put premiums. Understand weekly expiry and monthly expiry. 13. I want to understand options scalping strategy ? Options Scalping is a quick entry and exit strategy usually within minutes of price movement in the intended direction and involves option buying either Call side or Put side. This strategy is primed for Option Buying and not Option Selling. 14. I heard option selling is more profitable than option buying. Is it correct ? Option Buying does not have the obligation to buy or deliver stocks. Hence the loss, if any is limited to the premium paid. Option Selling is a different science / art, and requires its own setup. Siva recommends Option Buying as a trading system (Calls or Puts). Option Buying enables to make money quickly whichever direction the underlying asset price (BankNifty Spot) moves. The risk benefit tradeoff in Option Buying is a better profile than in Option Selling. 15. Which equity derivatives and equity does Siva trade ? Siva trades in BankNifty as it offers the liquidity and price movement (volatility) required for trading. Also BankNifty reflects the core banking sector of Indian economy, hence moves well with external events and Macro / Micro economy trends. 16. Which trading App should I use for Option Trading / Scalping ? You can use any trading app from any broker, however Siva recommends TradeSmart. You can get preferential and exclusive priced plans with Siva referral. Please refer ‘Why Brokerage Matters’ question answer above. 17. How do I get world view and India view before trade begins ?
Visit investing.com, Bloomberg.com, NSE India Option Chain data etc. Links below: • https://chartink.com/stocks/banknifty.html • https://in.investing.com/indices/indices-futures • https://www.nseindia.com/products/content/equities/equities/oi_spurts.htm • https://www.bloomberg.com/asia • https://www.moneycontrol.com/ • https://nifty-pe-ratio.com/ https://www.nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp? symbolCode=-9999&symbol=BANKNIFTY&symbol=BANKNIFTY&instrument=OPTIDX&date=&segmentLink=17&segmentLink=17
18. How do I get the automated OI sheet for BANKNIFTY AND NIFTY? Download the latest updated sheet from this telegram link. (https://t.me/c/1469090377/37737 (link will work only for telegram members)
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19. What are the common settings for indicators / oscillators in the charts ? Please refer image below for chart settings in Kite of Zerodha.
20. What should be my stop loss ? Siva’s recommendation for Stop Loss is previous day’s profit on an overall basis for the day. 21. How much capital should I set aside for Option Trading ? You can trade with minimum 10000 INR, but 1lakh is recommended. 22. How much trading capital should I use for trading each day? One third of your original capital should be used maximum for trades each day. 23. How many computer systems and screens I should have ? What is Siva's system setup? As long as you are able to track charts and enter orders in the NEST trading terminal, it is fine. No need to have fancy 4-6 screens, powerful desktops. However i5 / i7 is recommended. Siva utilizes three i5 and i7 systems (desktop and laptops) and mobile app clients for trading on the move.
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24. I have lot of loans, need money quickly to repay EMIs. What should be my approach ? Just like any other vocation, trading also needs study and practice, there are no shortcuts. However instead of investing directly in equities, taking a low risk method of trading in options and that too option buying may be an attractive option for gains over a period of two to three quarters. Siva took almost 7-10 years to be profitable at a sustainable consistent level.
You have to learn well, practice well and try to be disciplined to exit trades without greed and repeat the cycle. Try to achieve consistent trading results and efficiency. There are no shortcuts, learn one setup / one strategy well and practice it with 1 or 2 lots and then grow into bigger lots. For your financial advisory, please consult with a SEBI registered financial advisor or a certified financial planner. 25. When should I not trade ? When there is sideways movement, when indicators are giving false signals, when momentum is huge due to unexpected external events or announcements. There is a risk of capital erosion. 26. When should I stop trade ? When you reach your target profit for the day.
ALL THE BEST
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DISCLAIMER
Mr. Sivakumar Jayachandran (Siva) is not a SEBI Registered Advisor. This document, WhatsApp groups and the Telegram channel is purely for educational purpose only. No claims are being made on the document content or images or quotes for copyrights. This document is a refresher document for the benefit of the traders who are learning to improve their trading methodology. No claims or guarantees of returns of investment in the equity markets or derivatives are made in this document. This document will be helpful for learning concepts. Please practice risk management and capital protection as per advice of your financial advisor. Siva is not responsible for your decisions and investments, profit and loss in equity and derivatives markets. Please consult and confirm with your investment and financial advisor for all trades and investments.
TABLE OF CONTENTS
I. INTRODUCTION Trading Framework
1 3
PREPARE FOR TRADING Global Indices Crude USD:INR Charts Analysis Buy/Sell Analysis NSE Website OI Spurts VIX Individual stocks
3 3 3 3 4 4 4 4
II. PLAN WITH INDICATORS
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RSI Open Interest SuperTrend VWAP Volume Parabolic SAR (PSAR) Candle Stick Patterns How to select Strike Price? Implied Volatility (IVs) OI Spurts
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III. EXECUTE THE PLAN
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Gap-Up Gap-Down Trend Day (Up or Down) Sideways Day
12 12 12 12
WHAT IS A GOOD PRICE FOR AN OPTION?
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IV. PLAN FOR WEEKLY EXPIRY Example: February 24th Example: February 25th Example: February 26th
13 14 15
V. ANNEXURE About Siva About Training About Trading About Psychology of Trader
OPTIONS SCALPING REFRESHER DOCUMENT
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Introduction Options originated as a hedging mechanism. Hedging is protection against any unexpected event or outcome. Large institutional traders have to hedge their positions in equity with options, so if there is an anticipation that stocks could fall (due to external events or company specific reason), institutions buy put options to protect their capital and equity positions when their stops are hit, in a falling market. Likewise, in a market which is going up, and stock price is expected to go up, call options are bought to take advantage of the rise. Options can also be shorted and squared off like any other equities. This options and futures segment is called equity derivatives (F&O). In addition, there are several advanced option strategies like Iron Condor, Butterfly, Bull Call Spread, Put Call Spread etc. which are employed by advanced traders. The advanced strategies are outside the scope of this refresher document.
Options can be bought or sold. Option Sellers are called writers (Call writers or Put writers). Option buyers buy options(Calls (CE) or Puts(PE)) when writers offer them the option contracts. When premiums are low or IVs are low, writers may not choose to write options (call or puts). Buyers can square off intra-day, or carry positions until expiry (weekly or monthly). Options are of three types: a) In the Money, b) At the Money c) Out of the Money. If the underlying price is above the strike price, then the CALL option is said to be In the Money. If the underlying price is below the strike price, then the PUT option is said to be In the Money. ITM and ATM are suited for option buying. Siva opines that OTM are Out of the Market! and not to be traded regularly.
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In the above option chain table, yellow marked ones / highlighted ones are in the money (ITM). Learn options trading at the following links: https://www.investopedia.com/options-trading-strategy-and-education-4689661 https://zerodha.com/varsity/module/option-theory/
The core of Siva’s trading approach is to execute quick trades within a span of few minutes to enter and exit in the strike price option through buying(entry) and selling(exit). Siva doesn’t encourage carrying positions especially in markets where unforeseen events increase volatility beyond anticipation. It is recommended to read the chart well with the indicators and form a view based on macros (global indices, news, FII and DII buy/sell behavior) and then execute the plan. Simply put, it is to Prepare, Plan and Execute. In addition this scalping approach could be utilized not just for BankNifty, but to Nifty, and other stocks which are liquid (such as of Nifty 50) and have volumes with movements which can help take trades.
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Trading Framework Let us briefly discuss each element in the framework.
PREPARE 1. Global Indices such as S&P 500, DJIA (DOW 30, like our Sensex), CAC, DAX, HANGSENG, SHANGAI and SGX Nifty are important ones to track. Around 130PM India time, its important to track Europe markets for trends and macro indications. Around 3PM, its important to check movements in DOW Futures for possible 3PM moves or closing moves. 2. Crude is important for India and its economy as 80% approx.. is imported. Hence, any increase in price, leads to inflation and can cause rate increases and increased cost of business which is negative for businesses and banks. Crude price should be low but there are some instances where crude prices become low due to less demand due to trade war, disease outbreaks, natural calamities. This reduction in oil demand is again negative as reduced consumption of resources, leads to reduced business growth. 3. USD:INR The rate should be stable without any wild movements. More rupees for each dollar, IT stocks would be earnings positive, but for imports of crude and any other raw materials and / or semi-finished goods, businesses would need more rupees per dollar to get the same material. Hence, the inverse relation of Bank stocks with IT stocks. If IT is up, Banks go down and vice versa. A strong rupee is a good sign of a strong economy, in general. When FIIs sell, they encash dollars, When FIIs buy, they spend dollars. More dollars in supply, less its value, less dollars in supply, more its value. 4. Charts Analysis of previous day is useful for patterns, volumes, open interest, momentum etc. at 3 minute, 15minute, 1hr, 4hr and 1 day time frames.
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5. Derivative Buy/Sell Analysis in ICICI Direct site. In this site, a 15minute/30minute wise analysis is given of buy/sell behavior such as Short Covering, Short Buildup, Long Unwinding, Long Buildup etc. It also shows the OI and change in OI (as in contracts). 6. NSE Website OI Spurts shows the same information at an aggregate level: Rise in OI-Rise in Price (Long Buildup) Rise in OI-Slide in Price (Short Build Up) Slide in OI-Rise in Price (Short Covering) Slide in OI-Slide in Price (Long Liquidation) 7. VIX – This is the volatility index. For the US markets, it is the S&P 500 VIX, which is traded as well. For India market, it is India VIX, this index is not traded. India VIX has ranged 10+ to about 45+. As of Feb 26th, it is 18.26 which is a 8% increase over previous day. As of March 9th, India VIX is 30.8 which is a 21% increase over previous day. Growing VIX indicates bearishness and high volatility. There could be violent moves either side, but a higher VIX keeps index spot price rise in check. It's rise is helpful for bears and fall for bulls in general. 8. Individual stocks behavior in Indices. Its important to understand individual stocks price movement within the indices. Lets examine for NIFTY and BANKNIFTY. a) NIFTY: This is a collection of 50 stocks across major business sectors.
Please note the key stocks Reliance, HDFC Bank, HDFC, ICICI Bank, TCS, ITC, L&T etc., price movements define the movement of NIFTY. Typically a change of 2% to 5% in a major stock will be a big move.
Markets are not casino, have the discipline and knowledge to enter. Do not believe in stock and levels tips services. They give entry levels to retail so that they or their clients can exit. Do not take personal loans for funding capital. Do not develop a bias for the market or trend. Respond to market moves, but do not predict, trade and pray.
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Let's calculate: Lets say, HDFC Bank moves up by 2% on a good day. That itself can push NIFTY up by 25 points. Assuming 1 lot 75 Qty, that translates to 75*25 = Rs. 1875 which is more than the CMP of HDFC Bank of Rs. 1193. That is the power of options and heavy weight stocks like HDFC, Reliance etc. Also to be noted is that due to sectoral rotation, there will be some sectors which rise in prices, and some which fall, some day. So it’s the overall blended effect that matters. Following is the movement of NIFTY over the years:
b) NIFTY BANK: The NIFTY Bank Index comprises of the most liquid and large Indian Banking stocks. The Index comprises of maximum 12 bank companies listed on the NSE.
A similar 2% increase in price of HDFC Bank can lead to a 165 point increase in NIFTY BANK at CMP of 30500. Of all the sectoral indices, NIFTYBANK has given better returns since inception and is highly liquid and indicative of Indian economy, hence Siva’s preference to NIFTYBANK for trading options.
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The below chart shows the movement of BANKNIFTY over the years.
So the best way to analyze indices is through its constituent companies and their growth or fall in % terms and their impact on the index. Quarterly results, positive or negative news , of economy or government decisions, RBI rate changes etc., can trigger rallies or risk offs or breakdowns. This analysis completes the step 1 of the trading preparation. Next step is to PLAN for the trading session. It's a Myth that only Option Sellers make money. Option Buyers have limited risk. In Scalping, Enter and Exit in few minutes or max 10 minutes. Do more trades depending on your setup and entry/exit criteria. Leverage is not important. Platform and Techniques are important.Take test trades (with less quantity - 1 lot) to check whether your understanding is correct.
PLAN Once we are prepared, now let’s plan for the trading session. We need to have a setup with the right tool, trading platform and chart setup. Siva recommends TradeSmart 3999 Plan with NEST desktop version for trading (details in Annexure). It is also strongly suggested to use Siva’s Option Scalping tool with its dashboard and OI analysis sheets which shows cross overs and change in OI/Price movements of Call and Put options. For charting of BankNifty futures or Nifty futures, any tool with the below settings is recommended, explained individually, item wise. a) RSI (Relative Strength Index, 14): Setting: 20 to 80. RSI indicates the strength for an up move or downmove. RSI indicates the momentum and is an oscillator.
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b) Open Interest: OI indicates the interest among buyers or sellers on either side. The important metric is change in OI which is useful for determining the movement of the underlying price (futures or spot). Open Interest could include OI of weekly expiry / monthly expiry etc. The important numbers to track are around 500k+ to 1.5mn+ OI and changes to OI. Kite by Zerodha or Chartink or Tradingview are some good options for charting. c) SuperTrend: Setting 10,2 for 3 min time frame. SuperTrend is a trend-following indicator . On the chart, its easy to identify as a vertical multiple green arrows up or vertical multiple red arrows down. Its important not to blindly follow SuperTrend as it needs to be correlated with RSI, Volume and Followup candles. There could be false breakouts and false breakdowns. Tip: In a trending or sideways move, the first time price candle wick hits SuperTrend line, it takes support ( while falling) / resistance (while going up) accordingly.
d) VWAP: Volume Weighted Average Price is the ratio of the value traded to total volume traded over a particular time horizon (usually one day). VWAP is similar to a moving average in that when price is above VWAP, prices are rising and when price is below VWAP, prices are falling.
Tip: VWAP is a lagging indicator. For charting at 915am or in the first few hours, analyze using previous day’s VWAP and not the current days VWAP. This is required to eliminate any bias due to current days VWAP line.
e) Volume: For NiftyBank a volume of 50k and for Nifty, a volume of 100k is decisive per candle. Also important is the 2nd followup candle to indicate trend and direction confirmation. Without followup candles, there could be false breakouts. Advanced technical analysis on candles is out of scope for this document. f) Parabolic SAR: (PSAR) Setting 0.02, 0.2 The parabolic stop and reverse (PSAR) indicator Is a tool to find price reversals which can be utilized as stop-loss levels as well as trade triggers. The indicator is composed of a series of dots, either above or below the price. When dots move from below to above the price bars, it is time to get out of longs or get short.
Tip: The more gap between the PSAR dots and the price, the more is the scope for making money, upside and downside. Consider this gap with the SuperTrend and VWAP lines.
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Candle Stick Patterns
Candlestick patterns are beyond the scope of this document but a collection of candle stick patterns for general idea is given below.
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Tip: OI data is GOD, learn the interpretation well and use the Option Scalping tool. See the levels where writers are busy. Check levels ITM or ATM for entry. Sideways market is good for trading as you can understand the levels better with support and resistance, levels between VWAP-SuperTrend etc.
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How to select strike for trading ? In the option chain, select strike prices near the max pain area (where the spot price is hovering). Range will be 3 strikes above and below. Keep a 500 point broad range to analyse OI and IVs. On expiry days, it is suggested to trade in ITMs. On other days, can take OTM (only with conviction) or ATM, depending on anticipation of events or trends. Usually trades between VWAP and SuperTrend range can be executed but this cannot be taken in isolation.
What is a good price for an option ? For CALL: Spot – Strike Let’s assume, BankNifty Spot is 30080 and 30000 CE price is at 150. Actually the price of the call option should be 80, but as it is at 150, it is overvalued (Premium is high). If we buy the call option at 150, then we would need more than 100 point bounce to Break even Point (BEP). Writers like these over-valued strikes for premium erosion. For PUT: Strike – Spot Let’s assume, BankNifty Spot is 30080 and 30100PE price is at 20. This option price is priced just about right and there is no premium left for writers to write or for premium erosion. Hence, writers may not be interested for adding volumes in this strike price, BUT dependent on Spot price movements. More information: https://www.investopedia.com/articles/active-trading/021014/options-basics-howpick-right-strike-price.asp
Implied Volatility (IVs) Implied volatility is a metric that captures the market's view of the likelihood of changes in a given option's price. It shows the market's opinion of the option's potential moves, but it doesn't forecast direction. If the implied volatility is high, the market thinks the option has potential for large price swings in either direction, just as low IV implies the option will not move as much by option expiration.
For more information: https://www.investopedia.com/ask/answers/062415/how-does-implied-volatilityimpact-pricing-options.asp
Tip: Tuesdays and Wednesdays post 2PM, IVs tend to be higher, so ITMs are better to trade. IVs play an important role in expiry and writers need premium, if premium is not interesting, writers will not be interested. Also keep a tab on the adjusted close prices of the options.
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OI Spurts Previously we detailed the 4 scenarios of OI spurts. To repeat, Rise in OI - Rise in Price (Long Buildup), Rise in OI - Slide in Price (Short Build Up), Slide in OI - Rise in Price (Short Covering), Slide in OI - Slide in Price (Long Liquidation). Source for the below section is from Zerodha Varsity. Thanks to Zerodha.
The following tables summarizes the trader’s perspective with respect to changes in volume and prices.
Unlike volumes, the change in Open interest does not really convey any directional view on markets. However, it does give a sense of strength between bullish and bearish positions. The following tables summarizes the trader’s perspective with respect to changes in the OI and prices.
Do note, if there is an abnormally high OI backed by a rapid increase or decrease in prices then be cautious. This situation simply means that there is a lot of euphoria and leverage being built up in the market. In situations like this, even a small trigger could lead to a lot of panic in the market. Source for the above section was from Zerodha Varsity. Thanks to Zerodha.
Tip: Price increase and Open Interest decrease due to short covering could happen even during liquidation. Both bears exiting and some of the bulls could be exiting. This is different from Long Liquidation (Quadrant 4), where Price and Open Interest both fall.
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Let's summarise the relation between Price, Volume and Open Interest now:
EXECUTE THE PLAN Once you have formed a market view, index view, constituent stocks view, strike prices identification and chart setup, its time to execute the plans.The scenarios could be: 1. Gap-Up: Based on a positive news post market, the market could open higher, its known in the pre-open rates at 9:09AM. Usually, unless the news is strong and RSI and Volumes are strong, there could be a sell off at the highs, also known as ‘Sell on Rise’. Please note, intra day high, previous day high, previous day low, and previous day’s VWAP for the first 2 hours of trading. 2. Gap-Down: Based on a negative news post market, the market could open lower and unless the news is strong (negative) and RSI is low and volumes are weak, there could be a pull back. This is also known as 'Buy on Dip'. Watch related indices and stock prices for correlating the moves. 3. Trend Day: A clear up side or downside move consistently giving new highs or new lows every 15mins or 30mins is a trend day. 4. Sideways Day: A range bound movement with alternating SuperTrend, VWAP and PSAR is a rangebound side ways trading day. There could be a zone where there could be a sell off or a breakout during the day. A perfect day for the well trained option buyer.
Tip: When in doubt, do not trade. When your profit target is reached, do not trade. Do not be a compulsive trader. Place limit orders and trail the stop loss for profits. Please do not carry overnight positions unless you are a positional trader. Option Buying with overnight positions is injurious to your wealth and stressful to your health.
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PLAN FOR WEEKLY EXPIRY For Thursday Weekly Expiry, we have to analyze the max pain strikes in the option chain and prior to that complete all the steps of ‘Prepare’ and ‘Plan’ in the Trading Framework. For this exercise, lets analyze the week of February 24th to February 26th for the expiry of BankNifty February of 27th. Also please note that this week was affected by the Corona Virus global emergence and Feb 21st was a trading holiday. Trump visited India, there were many global cues.
First lets identify the BankNifty closing of the days (purple mark), Feb 20th, Feb 24th, Feb 25th, Feb 26th. At a high level view, if you notice, Feb 20 to 24, Price decreased and volume decreased, From 24 to 25, price decreased and volume decreased, from 25 to 26, price decreased, volume increased and finally from 26 to 27, price decreased and volume increased on expiry.
February 24th – 30455, So lets look at 30400CE and 30500PE Strikes 30400CE
24th to 25th – Price decrease, OI increase – Quadrant 2 – Short Buildup 25th to 26th – Price decrease, OI increase – Quadrant 2 – Short Buildup (Notice the almost 350% increase in OI)
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26th to 27th – What happened ? OTM expired to 10 paisa.
February 24th – 30455, So lets look at 30400CE and 30500PE Strikes 30500PE
24th to 25th – Price decrease, OI increase – Quadrant 2 – Short Buildup 25th to 26th – Price increase, OI decrease – Quadrant 3 – Short Covering and Long Liquidation. 26th to 27th – What Happened ? Price increase and In the money(ITM) Expiry.
February 25th – 30432 - So let’s look at 30400CE and 30500PE, same analysis as above. February 26th – 30306 – So let’s look at 30300CE and 30400PE. 30300CE
24th to 25th – Price Decrease, OI Increase – Short Buildup Quadrant 2. 25th to 26th – Price Decrease, OI Increase – Short Buildup Quadrant 2. 27th Expiry – What Happened ? OTM Expired to 5 paisa.
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30400PE
24th to 25th – Price decrease, OI Increase – Quadrant 2 – Short Buildup. 25th to 26th – Price Increase, OI Decrease – Short Covering and Liquidation – Quadrant 3. 27th – Expiry what happened ? ITM, Price increase.
So how does the above analysis help? First we are checking the price and volume in the historical data of the BankNifty closing and then we are checking specific strike prices (ITM) on both the CE and PE side to perform the analysis and make the inferences. For monthly expiry, we have to collate all the month data. Please note that this also includes possibilities of position rollovers hence is a complicated.
Tip: Try to use previous day or previous session profit as stop loss. OR 10% of capital deployed. Cut down your positions as the trading day progresses unless setup is favorable and risk can be taken. Do not be a compulsive trader. Strengthen your psychology and be humble when you profit and keep calm when in loss. Give back to society - share knowledge, clear doubts of other traders.
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ANNEXURE Q&A ABOUT SIVA
1. I want to know more about Mr. Sivakumar Jayachandran. Any links to Bio? 2. Why Siva doesn’t trade equity stocks cash segment ? 3. What are Siva’s after trading hobbies ?
ABOUT TRAINING
4. Where can I get recording of Siva’s webinars ? 5. Is Tradesmart account mandatory ? Can we trade with our app of choice? 6. How to join / migrate to Tradesmart Rs. 3999/month plan ? 7. How does brokerage matter ? 8. I want to join Siva’s next paid webinar. How can I ? 9. I want to join Siva’s next free webinar. How can I ? 10. What will I learn in the webinars ? 11. Can I talk directly with Siva ?
ABOUT TRADING
12. I am a newbie / beginner in trading. Where should I start ? 13. I want to understand option scalping strategy ? 14. I heard option selling is more profitable than option buying. Is it correct ? 15. Which equity derivatives and equity does Siva trade ? 16. Which trading App should I use for Option Trading / Scalping ? 17. How do I get world view and India view before trade begins ? 18. How do I get the automated OI sheet for BANKNIFTY AND NIFTY? 19. What are the common settings for indicators / oscillators in the charts ? 20. What should be my stop loss ? 21. How much capital should I set aside for Option Trading ? 22. How much capital should I use for trading each day? 23. How many computer systems and screens I should have ? What is Siva's system setup?
ABOUT PSYCHOLOGY OF TRADER
24. I have lot of loans and need money quickly to repay EMIs. What should be my approach ? 25. When should I not trade ? 26. When should I stop trade ?
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1. I want to know more about Mr. Sivakumar Jayachandran. Any links to Bio?
Originally from Chennai, and based out of Bangalore, Mr. Sivakumar Jayachandran (Siva) studied hotel management and pursued his passion in the Healthcare I.T Industry, setup a BPO and then exited with 4x multiple (300% growth for investors). Siva then turned towards the India equity market as the next growth story and after initial setbacks, has not looked back since. Please read the full interview at CNBC: https://www.cnbctv18.com/entrepreneurship/sivakumar-jayachandran-journey-of-abpo-employee-to-a-star-trader-4484421.htm Mobile: 7829061536 (WhatsApp) Twitter: @justsiva123 Telegram: t.me/OptionsScalping 2. Why Siva doesn’t trade equity stocks cash segment ?
Siva opines that NIFTY or the broad Indian equities have high price earnings multiples and are not in investment range. Once the PEs are attractive, he may consider investments. Siva currently invests in a bit of gold and real estate. Readers can have a bird’s eye view of NIFTY PE at the following link: https://nifty-pe-ratio.com/ 3. What are Siva’s after trading hobbies ?
Siva is just like any normal person after trading / office hours. Loves to travel, listen to music and goes for long drives in weekends in his favorite BMW / JEEP SUV on the interstate. 4. Where can I get recording of Siva’s webinars ?
No, you cannot get recording of his webinars, as his webinars are never recorded. As Siva shares his desktop and trading terminals with personal information, recording of webinars is not provided. Any screen recording of webinars by participants(whether paid or free) is prohibited and is against the spirit of training. Please respect Siva’s viewpoint in this regard. No recordings please. 5. Is Tradesmart account mandatory ? Can we trade with our app of choice?
You can trade with any app of any platform of your choice. Tradesmart is not mandatory. However Siva opines that Tradesmart has better support, customer service and the technical strength to handle robust trading with very less downtime. If you are desirous of opening an account with Tradesmart, please click the following link for Rs. 15/order plan. https://tradesmartonline.in/?referrer_id=YKAS146 and then migrate to the Rs. 3999 plan if you are a heavy trader.
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6, How to join / migrate to Tradesmart Rs. 3999/month plan ?
First you have to open a regular trading account with TradeSmart with the link / referral ID as above (Ans 5.) Then, You can migrate to the 3999/month plan from 15/order plan by sending an email to [email protected] and cc [email protected] with the following message in the body of the email and NOT as attachment. Request for Change of Brokerage plan To VNS Finance & Capital Services Ltd 401-402, A Wing, Mangalya, Marol Maroshi Road, Near Marol Fire Station, Andheri East, Mumbai 400 059. Sub: Request for change of Brokerage Plan for Client ID________________ I, ______________________________ having internet trading account with you for NSE/BSE with Unique Client Code: __________ do wish to change my brokerage plan as given below:
Please do the needful. Yours Faithfully, Client’s Name Client’s VNS Unique Client Code: _____________
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7. How does brokerage matter ?
Every trader should keep in mind before choosing a broker and these are the key parameters someone should pre-check before opening up a trading account First and the fore most is the software and the comfort of working on the same with ease Most of the traders get mis-guided by the huge margins being provided but again trading on huge margins probability losing out the capital quick How much we pay for each trade is more important as it directly impacts the profit most importantly paying brokerage from profits are OK but imagine paying high brokerage even on losses Many don’t even look at the contract notes every day If the broker provides an APP as we may trade at times on the move too Also one should check if they have call and trade facility Capacity - there are a few brokers with huge customer base always has a problem on big days and that’s where we get chances to make big money. Also as they have huge customer base most of the times it gets slower when loaded fully. Some brokers do not allow to pick OTM strikes , which again making huge profits through those calls gets affected There are people who pay even 150 Rs for buying options per lot, god knows how they make profits. Also a few people say they pay a 0.7% and if they look at the contract note , they will know how much they spend out. Though I have about 7 to 8 brokers , I have always used Trade Smart as my primary broker which is not only cost effective but also very much user friendly. Most of the traders just to avoid brokerage , instead of pyramiding at bottoms or tops , they buy at one go just to avoid small brokerages. A retail trader on my experience trades about 10 to 15 entries. Even 10 entries 10 * 20rs per day. 200rs * 22trading days is easy 4500. In the unlimited 3999 plan u can trade as many as you, Be Smart and Trade Smart... 8. I want to join Siva’s next paid webinar. How can I ? Please keep following the Telegram channel for the dates and process for enrolment. Seats get filled fast, usually 2-3 weeks before the actual date of the webinar. 9. I want to join Siva’s next free webinar. How can I ? Please keep following the Telegram channel for the dates and process for enrolment. Seats get filled fast, usually 3 weeks before the actual date of the webinar.
10. What will I learn in the webinars ? How to trade, how to place trailing SL, charts, how to read OI, when to take trade and not to take. How to trade on expiry days etc.. 11. Can I talk directly with Siva ? Yes, you can message him at the details given above and call with prior information and approval of time. Please respect Siva’s time for phone calls and the best way to reach him is to DM on Telegram or WhatsApp.
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12. I am a newbie / beginner in trading. Where should I start ? Start your understanding by following the index charts and price movement on the option chain excel sheet or on the NSE India website. Trade only in 1 lot until you understand movement of call and put premiums. Understand weekly expiry and monthly expiry. 13. I want to understand options scalping strategy ? Options Scalping is a quick entry and exit strategy usually within minutes of price movement in the intended direction and involves option buying either Call side or Put side. This strategy is primed for Option Buying and not Option Selling. 14. I heard option selling is more profitable than option buying. Is it correct ? Option Buying does not have the obligation to buy or deliver stocks. Hence the loss, if any is limited to the premium paid. Option Selling is a different science / art, and requires its own setup. Siva recommends Option Buying as a trading system (Calls or Puts). Option Buying enables to make money quickly whichever direction the underlying asset price (BankNifty Spot) moves. The risk benefit tradeoff in Option Buying is a better profile than in Option Selling. 15. Which equity derivatives and equity does Siva trade ? Siva trades in BankNifty as it offers the liquidity and price movement (volatility) required for trading. Also BankNifty reflects the core banking sector of Indian economy, hence moves well with external events and Macro / Micro economy trends. 16. Which trading App should I use for Option Trading / Scalping ? You can use any trading app from any broker, however Siva recommends TradeSmart. You can get preferential and exclusive priced plans with Siva referral. Please refer ‘Why Brokerage Matters’ question answer above. 17. How do I get world view and India view before trade begins ?
Visit investing.com, Bloomberg.com, NSE India Option Chain data etc. Links below: • https://chartink.com/stocks/banknifty.html • https://in.investing.com/indices/indices-futures • https://www.nseindia.com/products/content/equities/equities/oi_spurts.htm • https://www.bloomberg.com/asia • https://www.moneycontrol.com/ • https://nifty-pe-ratio.com/ https://www.nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp? symbolCode=-9999&symbol=BANKNIFTY&symbol=BANKNIFTY&instrument=OPTIDX&date=&segmentLink=17&segmentLink=17
18. How do I get the automated OI sheet for BANKNIFTY AND NIFTY? Download the latest updated sheet from this telegram link. (https://t.me/c/1469090377/37737 (link will work only for telegram members)
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19. What are the common settings for indicators / oscillators in the charts ? Please refer image below for chart settings in Kite of Zerodha.
20. What should be my stop loss ? Siva’s recommendation for Stop Loss is previous day’s profit on an overall basis for the day. 21. How much capital should I set aside for Option Trading ? You can trade with minimum 10000 INR, but 1lakh is recommended. 22. How much trading capital should I use for trading each day? One third of your original capital should be used maximum for trades each day. 23. How many computer systems and screens I should have ? What is Siva's system setup? As long as you are able to track charts and enter orders in the NEST trading terminal, it is fine. No need to have fancy 4-6 screens, powerful desktops. However i5 / i7 is recommended. Siva utilizes three i5 and i7 systems (desktop and laptops) and mobile app clients for trading on the move.
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24. I have lot of loans, need money quickly to repay EMIs. What should be my approach ? Just like any other vocation, trading also needs study and practice, there are no shortcuts. However instead of investing directly in equities, taking a low risk method of trading in options and that too option buying may be an attractive option for gains over a period of two to three quarters. Siva took almost 7-10 years to be profitable at a sustainable consistent level.
You have to learn well, practice well and try to be disciplined to exit trades without greed and repeat the cycle. Try to achieve consistent trading results and efficiency. There are no shortcuts, learn one setup / one strategy well and practice it with 1 or 2 lots and then grow into bigger lots. For your financial advisory, please consult with a SEBI registered financial advisor or a certified financial planner. 25. When should I not trade ? When there is sideways movement, when indicators are giving false signals, when momentum is huge due to unexpected external events or announcements. There is a risk of capital erosion. 26. When should I stop trade ? When you reach your target profit for the day.
ALL THE BEST
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