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Old 18-07-2017, 10:43 AM
rvlv rvlv is offline
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Default sTOCK OPTIONS-How to find the basis

Hi Traders

Here comes the puzzle.

some stock options move from 100 % to 3000%.

Please try to find the visible basis so that we can look for similar moves in other stock options.

Also kindly note that the starting price of these big movers is quite small and uses small capital.
=======================================
1 BIOCON 17 JULY 360 CE
MOVED 3000 % ABOVE
In just 5 days, this option moved from 1.5 to 47.70
BIOCON FUTURES MOVED FROM 390 TO 415 SAY 4%
kindly note that the futures prices are not perfect.may be wrong slightly off.
people who have optios data may give right prices to match option prices.
sorry for this mistake.

2.HINDPETRO 17 JULY 380 CE MOVES UP BY 2300% in 5 days

it moved from 0.60 to 22.00

3. JUBLFOOD 17 JUL 1200 CE MOVE UP BY 1121%.

It moved from 6.8 to 83
We hear lot of operator sharks in this they may not allow you to buy or sell right. beware.
volumes not coherent.

4.BAJFINANCE 17 JUL 1550 CE MOVE UP BY 933%
Price moves up from 3 to 31 in 5 days.

================================================== ===
Warning
options do not go by technical indicators.
RSI-MACD-STCH-MA may not help.

what matters mainly is because of following

1 Underlying stock movement magnitude n direction
2 time to expiry
3 volatility
4 VIX
5 DELTA of the option theta gamma of option
6 volume traded
7 open interest
8 ratio of volume/open interest


Just forgot to mention a small but critical thing
while buying an option,normally,you prefer to wait for it to fall and then buy at the low price.
sure you do that but with a difference.
BUY THE RISING PRICE. and when price increases
Suppose an option is trading at 0.50. check its atr and find high +atr= buy trigger price
place a trigger buy at this price.
as long as price falls,keep lowering your trigger.
the moment price rises you get bought.

Last edited by rvlv; 18-07-2017 at 06:26 PM.
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Old 18-07-2017, 10:47 AM
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Basicaly it's vega and gamma, since theta is predictable - understanding vega and gamma should do the job
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Old 18-07-2017, 11:11 AM
no1lives4ever no1lives4ever is offline
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Understand how black scholes model works.

Most of the moves you are describing looks like that of a OTM option ending up ITM near expiry because the underlying moved from below the strike price to much above the strike price.

When an option goes from OTM to ITM, then the option premium will show a huge move and it is easy to find moves that result in option prices going up by a few multiple. The closer you are to expiry, the faster these moves happen. This is explained by the gamma.

One advice when you look to trade these kinda moves would be to look at the initial premium paid to purchase such an option as the total risk you take, since moves that happen this close to expiry will typically result in the option expiring worthless if the move in the underlying does not happen.

Quote:
BIOCON 17 JULY 360 CE
MOVED 3000 % ABOVE
In just 5 days, this option moved from 1.5 to 47.70
BIOCON FUTURES MOVED FROM 390 TO 415 SAY 4%

I dont know how the 360 ce option was trading at 1.5 when biocon futures was at 390. Its intrinsic value should have been closer to 30. That is unless biocon cash was trading below 360 and futures were trading at 390 and then both cash and futures ended up zooming up to 415 and higher. Another explanation is that the option is highly illiquid which allowed arbitragers to leave such a huge mispricing get away.

-- no1lives4ever
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Old 18-07-2017, 11:23 AM
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Haha the subject is still an enigma to me.

Rightly as JJ has said . Understanding phases of volty is the secret.

I feel trend cycle understanding will also help.

Price Failures will help. Am I correct what MP experts say "Auction Failure".

But recently I found that if you can find out the price levels which act as magnets works nice.
In this context .

Hidden Gaps WRB's is next learning target.

rvlv keep on posting new ideas. Sometimes experts like JJ also like distraction.
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Old 18-07-2017, 02:20 PM
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Pls provide the Futures prices for these on the specified date to see how OTM they were
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Old 19-07-2017, 02:25 PM
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There is one aspect though of which we can take advantage.

UNUSUAL OPTION ACTIVITY

The Power of Unusual Option Activity:

An increase in the trading of a stock's options over the normal daily volume is often a precursor of movement by the stock itself. This is especially true in advance of news items, such as earnings reports or takeovers.

If there is unusually high volume in CALLS, then we look for a spot to buy the stock; if there is unusually high volume in PUTS, then the stock may be either a potential buy or a potential (short) sale. The reason that heavy put volume may be interpreted as either bullish or bearish has to do with the fact that, if insiders are buying calls, it may force market makers to trade puts as a hedge. Thus a bullish situation could conceivably have heavy option volume in both the puts and the calls.

In reality many traders prefer to buy the short-term, in-the-money options. These options have the least time value premium and will most closely mirror the movement of the underlying stock.

Last edited by Shrees; 19-07-2017 at 06:22 PM.
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Old 19-07-2017, 02:29 PM
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Can anyone tell me which are the best sources for knowing unusual option activity.

I heard that Reliance money is one.
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Old 20-07-2017, 07:17 AM
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SHREES

I think one solution is having a good data feed like gfdl or truedata for options and then track on chart price-volume-open interest.
price vs volume/openint holds one master key.

increasing v/opi ratio has a bell curve or inverted v shape.
it runs from 0 to 5 or 10 then tapers down.
but price is a exotic option just halts a while and takes off to 10 times or 20 times or 30 times.

Here we need more clues on how to utilise delta or vega & gamma as JJ pointed out. I have no idea about this obscure zone.

Request JJ to kindly guide us .
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Old 20-07-2017, 08:41 AM
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Originally Posted by Shrees View Post
Can anyone tell me which are the best sources for knowing unusual option activity.

I heard that Reliance money is one.

ICICI Direct having such scan.

Significant increase in In the money option premium but OI increased by small percent. Such ideas can give big move

Amogh
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Old 20-07-2017, 11:41 AM
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Just on lighter mode -
The world have "google".
But Indi's have at least two more.

"Joojle"
and
"Noogle"

Now guess who are they? Quite obvious . Right?
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