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SMI for Option Buyers

Option trading requires good knowledge of strike selection. You might want to check pre-requisite before continuing

Options buyer’s best friend is the trending market/stock. Thus wait for below listed scenarios of SBER for options buying for day trading.

Best conditions for option buying (either of these can be used)

  • Breakout of strength and sustenance marking (blue line). Breakouts with big candles are less friendly than usual sized candles.
  • Textual information is showing “Expected: Trend” and no trap alert is shown by SBER SMI. Recommended.
  • There is breakout from “Expected range” shown as textual information.
  • Options buyers prefer buying calls for up trend and puts for down trends.
  • You can always delta hedge your position if not sure about open position.
  • If you are not sure about the strike selection, prefer to trade near OTM when expiry is far, or ATM/ITM when expiry is near (indicative only).
  • Exit the trade if any of above mentioned condition for trade is interrupted.

 

Do not trade options if textual information reads “Abrupt indecisive moves expected” or “Info NA”