BHEL

SELL BHEL BELLOW 271.50 TARGET 255-250 KEEP STOPLOSS AT 275.60 AND HOLD FOR 3-4 DAYS

NIFTY FUTURE

Nifty Future : Nifty future we have written  that it will face immediate resistance  at its 200-day SMA near 5219. Just check how it checked the level in the friday session.  What was your trade for the day?  huge open interest  build up in 5300 CE and 5000 PE. Data shows that once nifty will fall to 5040 level. Nifty February series begin with writing 5000PE strike price with highest open interest among the series. Also there is condierable amount of option interest visible in 5200CE and 5300CE. Spike in open interest in these option strikes in the upcoming sessions could drag the nifty towards 5040 level.

 NIFTY WILL GIVE FIRST FALSE BREAKOUT THEN IT WILL FALL TO 5040 LEVEL. IT HAS NEVER MOVE UP IN ONCE AFTER CROSSING 200 SMA.
BUY 2 LOT 5200 PUT AT 115. STOPLOSS WILL BE AT 5240 SPOT NIFTY ON CLOSING BASIS.

Difference Between Options Volume and Open Interest               

In stock trading, you measure stock market activity & liquidity by volume. In

options trading, there are two measurements: Open Interest & Volume.

Unlike in stock trading, whereby there is a fixed number of shares to be traded

(i.e. number of outstanding shares), in options trading, new option contracts

need to be created when a trade is placed and there is no existing contract yet.

When a new expiration month initiated, there is no open interest because there are no option contracts being traded for that month yet. As trading builds up, open interest will also increase. Now, what is Open Interest?

Open interest is the total number of option contracts that are still open (i.e.

have not y et been exercised, or have not been closed out by an offsetting

transaction, or have not expired).

Open interest increases when new contracts are created by options buyer and seller, whereby a new buy er takes a new long position and a new seller takes a new short position.

On the other hand, open interest decreases when both the options buyer and seller with existing position close out their respective positions and the contract disappears.

Closing out the position can be done by doing an offsetting transaction (i.e.

the existing buy er sells the option to close his long position while the option seller buy s back the option to close his short position), or by exercising the Please bear in mind that open interest only increases when new contracts are created. Hence, when a trader who does not have a position in the option before buys from another trader who has an existing long position and want to close his position by selling his option contract, open interest does not change because a new contract is not created.

Then, what is volume in option trading and how options volume is different from open interest?

Options Volume is the number of option contracts traded during a given

period of time. Hence, volume reflects the number of options contracts that

changed hands from a seller to a buyer, regardless of whether it is a new contract being created or just an existing contract.

For more clarity , lets see the examples below:

On Day 0, Open interest = 0, Option Volume = 0.

On Day 1 , A buy s 2 option contracts and B sells 2 option contract.

Open interest = 2, Option Volume (for that day ) = 2.

On Day 2, C buy s 7 option contracts and D sells 7 option contracts.

Open interest = 2 + 7 = 9, Option Volume (for that day ) = 7 .

On Day 3, A closes out his position by selling 2 option contracts, and D closes out part of his position too by buy ing back 2 of his option contract.

Open interest = 9 - 2 = 7 , Option Volume (for that day ) = 2.

Open interest reduced by 2, because A & D have an existing position before, so this transaction is an offsetting transaction to close out their respective

positions. As a result, 2 contracts disappear.

On Day 4, E buy s 3 option contracts from C who wants to sell part of his option contracts (3 contracts).Open interest = 7 (no change), Option Volume (for that day ) = 3.

When E buy s from C, it does not create new contracts. E who does not have a position in that option before simply replaces C who wants to exit his long

position. Hence, open interest does not change.

I have given three charts  . on daily charts there is a strong trend line resistance near 5168- 5200. on weekly chart nifty is showing strong resistance near 5200 level. two closing above 5200 nifty will jump to 5400 level.
But the question is will nifty cross the trend line?
ok now consider the charts. on daily and weekly charts RSI, SLOW STOCHASTIC, are showing over bought situations. so I strongly think that once nifty will comeback atleast 4900 level.
FROM DOWNSIDE  It will face strong support at 5000 level. any close below 5000 nifty may slip to 4900-4850.