As we near the end expiry of
an extremely volatile month with a little more than a week to go. Options accumulation
zones from here on can be a key indicator to identify where markets are headed.
Often combining one’s trading
systems with options accumulations zones can give very good low risk opportunities
of more confirmed trading levels.
Rules for understanding
options accumulation:
1. The significance of options trading
zones accumulation will increase more towards the series expiry so consider
this as an input only during the second half of the trading monthly cycle
2. Identify highest zones of PE
accumulation by volume. The higher the volume indicates more PE writing at
those levels. This forms the base and is an indicator of support levels.
3. Identify the highest zones of CE
accumulation. Similarly they represent the CE writing levels and forms the
ceiling or resistance for that series.
4. Mark these levels in your charts and
use them with your existing systems to take more confirmed entries.
So what is the current
situation for Nifty Futures for August series
As always let the charts tell
you lot more than the words:
 |
| NIFTY OPTIONS Accumulation data- 20th Aug-2013 View |
Charts data interpretation:
1. The highest PE accumulation is at 5300
trading zones indicating that this is a strong base and we may not go below
this level on a closing basis for this series. Hence it can be used for pull
back contrarian longs
2. CE accumulation is distributed evenly
around 5500-5700 zones indicating that at every level we will face resistance
on the upside and at the same time this doesn’t present a clear picture at this
stage for upside levels. The highest CE accumulation is at 5800 levels almost
confirming that we may not breach that level on the upside and it will form a
good SL swing wise for rises upto near that level.
The same technique can be used
to analyze other index futures and stock futures for a ready reference and will
help in one’s trading decision making.
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