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Multi-Strike in options trading refers to a trading strategy involving the simultaneous buying or selling of options contracts at different strike prices to create a diversified position.
Multi-Strike options refer to a trading approach where an trader utilizes multiple options contracts with different strike prices to construct a diversified and flexible position in the market. This strategy allows traders to hedge their risks, take advantage of various market scenarios, and potentially maximize their returns. By combining options with different strike prices, traders can create complex positions tailored to their specific market outlook and risk tolerance. It provides a more comprehensive approach to options trading by accommodating a broader range of market conditions and potential outcomes.
When looking at the open interest of different strike prices in Nifty options, it gives us clues about market sentiment.
High open interest at a specific strike price: If a particular strike price for either call or put options
shows significantly higher open interest compared to surrounding strike prices, it suggests that market
participants have a strong interest in that level. This strike price can act as a support or resistance
level, indicating a potential price target or turning point.
Rising open interest with increasing strike prices: If open interest
increases as you move to higher strike prices, it indicates a bullish
sentiment in the market. Traders are accumulating more call options at
higher strike prices, suggesting an expectation of upward movement in Nifty.
Rising open interest with decreasing strike prices: Conversely, if open interest
increases as you move to lower strike prices, it indicates a bearish sentiment.
Traders are accumulating more put options at lower strike prices, suggesting an
expectation of downward movement in Nifty.
High open interest at multiple strike prices: When multiple strike prices show significant
open interest, it suggests a range-bound market or potential consolidation. Traders are
positioning themselves at various levels, indicating a lack of consensus on the direction of Nifty.
Unusually high open interest at out-of-the-money (OTM) or in-the-money (ITM) options: If there is
a notable increase in open interest at OTM or ITM options, it may indicate potential support
or resistance levels. Traders might be hedging or speculating on significant price moves near
those strike prices.
On the TalkOptions website, traders can able to view the MOST ACTIVE STRIKES.
The in-built graphical line chart shows the Underlying Index/Stock price with the selected Call strike Open Interest and Put Side Open Interest in numbers.
Traders have to just Select the Symbol of the INDEX/STOCK in the Menu Bar, Select the Expiry date. The website automatically
detects the Most Active Strikes of that particular underlying index/stock.
Along with this, traders can manually make the Groups of which they want.
Let's make this clear with the above image.
Here, we made one Group of Banknifty ATM Strikes
Here I have added ATM call options and ATM put Options.
So basically I made the Grouping of ATM strikes. Whenever I want to take the trade, I can check the Live
Open Interest of all Strikes at one time or else I can select individual Strikes.
So like this Traders can make many groups by just clicking the ADD button and traders can Name a Particular group and just add the Strikes
which traders want to see the Open Interest and then Just click on the DONE button on the top.
Thats it. Your group will be shown on the Main page. When you click on Select All options then graphical line chart will pop up which shows
the particular Index/Stock Futures line chart along with the select strikes OPEN INTEREST.
With the help of this feature, traders can manage their Risk Management. Traders can able to view and analyse the Volatility in the market.
Traders can deploy different strategies after the Multi-Strike IV analysis.
By adding multiple Groups traders probably get a full picture of the options market, efficiently manage risk, and make well-informed trading decisions based on their outlook on the market and trading goals.