How to be Successful at Trading Options Within a Day, by Nitin Murarka-2022

Nitin Murarka, a successful stock market investor with many years of experience, to decode how to do intraday options trading during an interesting session that was a part of the highly popular Face2Face series, which was conducted by Elearnmarkets. This session was conducted by Elearnmarkets.

This blog is devoted to all of our intraday traders as well as those individuals who are working toward the goal of becoming effective intraday stock traders. Therefore, if you want to learn about intraday trading, Mr. Nitin Murarka is the best person to learn from since he is the owner of a large proprietary trading organisation. In the video, he will reveal to us all the trade secrets that are unique to his company, including one that has brought him enormous returns on investment.

This blog begins with a short introduction of the author, Mr. Murarka, in which he discusses his experience working in the financial markets. In addition to that, he will discuss the lessons that he has learned from D. Agarwal, the CEO of SMC Global.

He has put a variety of options trading techniques to the test, but in this presentation, he will provide one of the most successful options trading tactics that not only he but also his prop-desk employs.

Fundamentals of the Options Chain for Those Who Trade Options

Now, you need to realise that this is data on choices that are used and watched by many people, but we designed it to analyse in a different method.

Now, let’s try to get a grasp on this choice chain. This data on a certain day is about 11, and the principle that we are applying in this is that if you are engaging in intraday trading, then you should do it at the bare least between 10:30 and 11:00 in the morning.

It is necessary to view the data in order to get higher levels of accuracy. If you just make your trades between 9:15 and 9:30 in the morning, you will not get a higher level of accuracy.

You will receive more accurate results if you look at the data from the morning and then make your trade after 11 in the morning.

Excel must be used to do this task, during which data must be imported and exported. You will need a striking price, which is the price at which you are now looking, followed by the most recent trading price;

You are able to see the change in the open interest here. I’m going to tell you about the call side, and this will also be about the call side. Additionally, there is something on the put side, and that something is the strike price, the last traded price, and the open interest.

Now that we have all the information, I will concentrate on describing how to earn a profit in the intraday trading. Since the weekly options have been introduced, the intraday options in one day from 50 becomes 100 and 100 becomes50; thus, there are very strong prospects to earn gains in the intraday market and in the index options at this time. Therefore, the intraday time frame is where this model shines.

To put it another way, the goal is to figure out how to generate a profit in the index on an intraday basis. You simply need to pay attention to the open interest in this table, which includes the open interest of calls and the open interest of puts. In other words, you should concentrate on the at the money strikes, as well as 4-5 points above and below the at the money.

Also Read-How Does KBC Make Money?

If this is the case, then I have made 6-7 strikes either above or below the money, which is 12200.

There ought to be an equal number of strikes on both sides, and after that, I need to determine how much of a change there has been in the total open interest on the call side and how much of a change there has been in the total open interest on the put side.

We have deduced the reasoning for this based on what we saw in both our brokerage house in SMC and also in other brokerage houses, namely that the options purchasing is where retail customers are showing the most interest.

Because ninety percent of the customers buy options due to the fact that they have limited funds, a limited capacity for taking risks, and a greater interest in buying in more creating volume on the buying side, we have assumed that whatever change there is in the open interest is changing because of buying from retail investors.

The shift of $490,000.00 in open interest may be attributed to retail investors’ increased interest in purchasing. These investors are more likely to purchase. In the same vein, if we see that there has been a movement of 540,000 in the open interest on the put side, we may deduce that the retail public is purchasing.

Now you can assume that FIIs are also buying, proprietary accounts are also buying, hedgers are also buying in their positions, and arbitragers are also buying in their positions. So basically, take the assumption that this buying is coming from the retail public, and we need to see the sentiments of this in the market to determine whether the sentiments are on the buying side or the selling side.

According to the statistics, it is clear that the general public is purchasing 540,000 put contracts and 49,000 call contracts. Therefore, their perspective is more focused on the business side of things, and they are more interested in feedback than the call itself.

How can the options chain be used to analyse the prevailing mood in the market?

You simply need to pay attention to the change in open interest, the change in open interest of calls and the change in open interest of puts in this table. This essentially boils down to the at the money strikes, as well as 4-5 points above and below the at the money.

Therefore, if the at the money is at12200, I have taken 6-7 strikes either above or below the at the money level.

There ought to be an equal number of strikes on both sides, and after that, I need to determine how much of a change there has been in the total open interest in the call side and how much of a change there has been in the total open interest in the put side.

We have deduced the reasoning for this based on what we saw in both our brokerage house in SMC and also in other brokerage houses, namely that the options purchasing is where retail customers are showing the most interest.

90 percent of the clients buy options due to the fact that they have limited funds, their risk-taking capacity is limited, and they have more interest in buying in more creating volume on the buying side. Because of these factors, we have assumed that whatever change there is in the open interest is changing because of buying from retail investors.

The shift of $490,000.00 in open interest may be attributed to retail investors’ increased interest in purchasing. These investors are more likely to purchase. In the same vein, if we see a shift of 540,000 in the open interest on the put side, we may deduce that the retail public is purchasing.

Now, you can assume that foreign institutional investors (FIIs) are also buying, proprietary accounts are also buying, hedgers are also buying in their positions, and arbitragers are also buying in their positions. So, basically, take the assumption that this is the buying from the retail public, and we need to see the sentiments of this in the market,

If the feelings are more favourable for purchasing or selling, respectively. According to the statistics, it is clear that the general public is purchasing 540,000 put contracts and 49,000 call contracts.

Their perspective is thus more on the side of selling, and they are more interested in feedback than they are in the call itself.

How can I locate the best or lowest risk entrance levels?

Therefore, we will be using VWAP for the entry. The volume weighted average price is shown by the green line in the graph. The weighted market volume average price, or VWAP, is another name for the weighted average price. Therefore, the market trading expenses, from the morning till now, the average traded price, is extremely helpful information to have.

So how do we create new entries? Therefore, please make certain that we do not engage in the trading of options before 10:30 in the morning. Before that, all we do is watch what the general population does when it comes to the markets.

If the majority of players are taking long or short positions. If other people are bearish and trading in PUTs, then it seems like a good time to purchase a CALL, in my opinion. However, knowing when to purchase the CALL is essential. Following that, we come to the VWAP. We make the purchase of the CALL close to the VWAP, not too far away from it.

Therefore, he makes an effort to utilise the periods when the price reaches the VWAP, and the times when it bounces back from the VWAP are the trading levels that he considers to be the most profitable. When you purchase here, we’ll relocate your belongings quickly. Look, you get a move here. It came all the way up to here and then came down again, but the stop loss didn’t get triggered since it is a bit broader than that. Therefore, the stop-loss for futures trading should be set at least 30–40 points lower from here on out.

If, on the other hand, you trade in options, you may put a stop loss 20 points below the VWAP using that indicator. The Call Option of the ATM. Let’s say you decided to buy an ATM call option for a hundred dollars. If the purchase price is somewhat close to the VWAP, then setting the stop loss at Rs80 would be a really good idea. Or, whether you are writing options or selling put options, it is recommended that you choose a stop loss of 20 rupees in either case.

Bottomline

Therefore, throughout the whole of this model, Mr. Nitin Murarka intends to place a focus on two fundamental aspects. First things first, you’ll need to determine the path that the data will take. If the trend of the market’s data is heading higher, then the same can be said about our own path.

Second, we have to hold off till the price is about equal to VWap. When it gets within a reasonable distance to the VWAP, we make a purchase. You will have a chance like that ninety percent of the time throughout the course of a day when the price comes somewhat near to the VWap. You just need to be patient and wait for things to happen. It is probable that in a week, you may miss out on two to three possibilities; nevertheless, the risk involved in pursuing those opportunities will be minimal.

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