The option is a dying Asset, despite ITM by 400 points, the option premium is sideways.
The option has the advantage of Theta Decay, but at the expiry has the Gamma risk. Meaning as we reach nearer the expiry, the explosiveness of the option will increase. You can check that on Wednesday, for a Thursday weekly expiry, the premium for a Rs 10/- option will increase to Rs 30/- , i.e 400% gain, but a corresponding next weekly expiry will only increase by 30% – 40%.
While adding more time to an option increases the VALUE of the option, it generally reduces the option’s Gamma. With more time to expiration, the option becomes less sensitive to movements in the underlying asset. However, as the option approaches its’ maturity date, its’ time value will move towards zero and then become more responsive to changes in the underlying price.
These graphs provide how Gamma is affected by the passage of time. Both plot a $25 call option’s Gamma across a range of underlying prices, however, on each graph is shown 3 different times to maturity. This is so you can see how the Gamma value becomes the highest when it is both ATM and close to expiration. When this happens, option positions will have the highest fluctuations in position value (Delta)
During Covid, the Market was up and up, but otherwise market is normally 25% trending and 75% sideways
Pre covid there was some structure, when Covid call came there was some different structure, when recovery came a different structure happened , now a different structure happened.
Trading stryle discretionary, hourly chart, weekly or bi-weekly options
If Heikenchi comes red, then next normally comes red, which can be additionally confirmed with MACD line going below signal line
This average range divided by the hourly range which is 154 now
Candlestick see price action, volume, candle bullishness , while trend is much simpler in Heiken Ashi
Cumulative Open Interest EOD. Big money on the buying side
Change in cumulative OI
Long Build up
Market Sentiments check for the heavy weight constituents of the Index. On OI check for short covering , during market times and EOD
