So, hello everyone, welcome back to your channel. If you trade in Nifty or Bank Nifty, then this blog is going to be highly important for you all. Because today you are going to learn step by step, how you can capture moves of 1000-1000 points in index, especially in Bank Nifty. And how will you be able to do that?
See, there is a very simple concept that you all have heard that when the seller loses, the buyer earns money and when the buyer loses, the seller earns money. Now, option trading is a zero-sum game. So, someone loses money, someone earns money. The seller always has an advantage, the probability of winnings more and the buyer has less. So, most of the time, the seller is earning money. But when the seller loses, it is a big loss and then the buyer earns a lot of money. So, how can you earn a lot of money?
Today, we have an expert with us to teach you, who is training thousands of people in option trading. None other than Rahul Prajapati. So, Rahul ji, welcome to our GOSELFMADE show. Thank you Pushcart ji for calling me. You are absolutely right because option sellers have a higher probability of earning in the market. And we have always seen that the buyer has a lower probability of winning. And we see that when new people come to the market, they do option buying and then lose out of the money and they go out of the market.
And if we look at the situation from the stats point of view, we have seen that the seller always has an upper hand and they have a probability of winning 66%. On contrary, the buyer has a small probability of winning 34%which keeps him playing the game. So, the concept that you have said here that where there is trap, the buyer will earn money there. But the problem is that finding the situation is a big problem for us. So, how to find it and what strategy to make by implementing it practically and how to earn money.
That should be our focus because the options market has become such a big market in itself. Different concepts are being made there and India is actually one of the largest markets in this world now in the derivative market. Specifically, in the back drifting market. So, from the basis of that, let’s talk about the trap. I will explain the concept first and then come to the actual indicator that how it works and how it is used. So, I will share my screen and we will understand the concept of open interest and then move to the trap concept.
So, first, let’s understand the concept of open interest. So, we will open the open interest chart for Nifty. Right. So, I will tell you that open interest is basically seen on the Nifty option chain. But when you are looking at open interest, you will understand practically that where is the actual resistance and support. Looking at the data. So, on the chart, you saw that the reversal came and you took support or resistance and marked it.
This is a different thing. Along with this, this will be an additional point for you to understand open interest. Because this tells you practical support and resistance from the data point of view. Rahul Ji, you can continue. You are absolutely right, Pushkar Ji. If you look at this chart simply, then it is easily understood in graphical representation.
So, you don’t have to do anything in this. If you look carefully, then the green line is the open interest of call and the red line is the open interest of put. So, where the biggest green line is, that is the resistance of the market and where the big red line is, that is the support of the market. I am engaging people here. People might be watching.
You can answer me or not, you can write it in the comment. So, what you are seeing on the screen is the maximum resistance and support. So, if you are seeing the maximum resistance at 17200 because the green line is the biggest here, then you are seeing it correctly. And if you are seeing the maximum open interest at 17000, then you are understanding the support. So, where is the support? It is at 17000.And where is the resistance? It is at 17200.We are able to find the resistance and support by looking at the open interest. You can continue, Rahul Ji. Sorry, I am stopping you. But it is important to engage people.
We are going to understand the concept later. But many people might not be clear with the basics. So, it is important to keep the basics in mind. Absolutely, Pushcart Ji. So, as you said, the market resistance is at 17200 and the redline is at 17000.It is quite big. So, we have the support. And you can see that the market is trading a little bit near the put. Right? Right. If you look carefully, you can see the orange line is the current price of the market.
So, you can see that the market is trading more towards support than resistance. So, we know the concept of simple technical analysis. If the market breaks support, then there are chances of the market falling. Now, you can visualize this. If you are an option writer who has written this 17000 put option, suppose the market stands at exactly 17000 in the next 10 minutes, how will you react? What will you do in that situation? So, generally, what option writers do is either hedge their positioner book a loss. Or shift their position downwards to strike. Right? In these 3 ways, option writers generally behave in the market. So, it is worth understanding that why did the put option writer have to shift his position?
Because maybe the nifty has been trending. Right? It is possible that when the market falls further down, the option writer will shift his position further down. Suppose we shift our position to 16800.The market falls further. So, what will he do? He might shift it to 16500.Right? This shifting itself shows us the concept of the trap. I will explain it to people here, Rahul, that when your option seller starts running away with the putoption, how will he run away? He was standing at 17000 and he ran away from here to 16800.
So, he ran away with the put option. This means that the market will move from there. And sir, it is very easy to run away with the put option. Right? No, no, it is easy. See, he is running away because he is in pain. But when he is running away, run after him. Exactly. So, a simple concept is generated here that if the put writer is trapped somewhere, the market will trend downwards. It will move in the downtrend, bearish trend.
And in the same way, if the market moves in the upside or the fall writer is trapped somewhere, the market will be bullish again. It is a simple concept. This is called the concept of the trap. Right? But the question is where should we go and find it? And in so many F&O, there are around 200 stocks. How do we find the position where the put writer is trapped? So, Rahul, I understood the concept but when the trap is happening, they won’t be able to see it. They won’t be able to visualize it. They won’t know that such a trap has been generated.
So, Rahul will tell you the concept. I found it very interesting. So, you guys also watch it because you will be able to capture big moves from here. Rahul, please continue. I will show you a very simple example in the stock too. So that we can understand how this concept actually happens. Right? Because the expiry has ended in Bank Nifty Nifty. And if you see from here, the position is getting built up. So, we will see it in the stock too so that we can understand the example. Now, see this.
This is a very interesting chart. You can see that if you look carefully, the green line is at1500 in the coal park. And if you see the put, it is at 1450.So, the stock is trading above its support and resistance. The support has dropped a lot and suddenly it has broken the level of 1500.It is trading at 1,501. And if you see carefully, the green line has an aloe bar on it. That means the option writer has already started unwinding itsposition.
It is important to explain this to people. When you see this white colored box, this rectangle is whitecolored. It means that the seller has started running away from here. Exactly. And when you see the green filled bar at 1520, it has shifted up. So, we can see the shifting here too. This is the concept of trap that we have identified. So, the coal option writer has been trapped. That means the coal can be stock bullish from here. Understood, right? So, this is our concept. Now, we will try to identify this very easily.
So, we have taken the example of Colgate because we have to explain the concept. Track the same in Bank Nifty. And it will be easier for you to track because Rahul will tell you in a click where the trap has been generated, at what rate it has been generated and what profit and loss is generated from its, you can continue Rahul. I found it very interesting and I am very excited to explain this to people.
Exactly. So, let me open the trap indicator. It is a simple screen. There is no complication in it. Just pay attention. As we saw the first example today, today is 17th.And we have the example of Zeal. In Zeal, it is showing put writer’s trap. We have just understood the concept of put writer’s trap.
In which we see that if there is a put writing trap, then itis a bearish stock. See the same example with Sun Pharma. Put writing trap is a bearish stock. Here you will see that in 4 stocks, it is showing call writing trap. It is a bullish sign for these stocks. Like we saw the example of Kolpal.See, Koala has put a loss in call writing trap in today’s date. That means we have identified it manually. But it is difficult to find it manually. Here you will get all of it on the screen. Similarly, these are stocks. Generally, we have seen that this trap indicator will work in stocks and indices. Search Bank Nifty here.
Let’s see the move of indices. If you see, recently we saw in Bank Nifty’s. 40,600. Trap indicator had identified that Bank Nifty can perish in the market. On 10th, it had a signal and now the market is at Rest. 69,350which is almost 3% return. You might have observed that the market is trading at a low level. If you see Bank Nifty, on 10th, it had a signal at a price of We have seen a 4% return. It is very difficult to capture such a big move in indices well in advance. This trap indicator shows you very easily. On 10th, it had a signal and now we can’t take this signal on that day. We need confirmation of open interest. So we have to take trap signals on the next day. If it gave this trade on 10th, then we will execute it on the next day. So on 13th, it was Monday and the trade started getting executed.
Let’s make people visualize that the day you got the signal, signals are coming to know what you have to do. After the signal, it shows you the return till now. If you had taken a trade on this, what would have been your return? I will show you the chart. We can understand the day of the trade. We can make a trade from there. The trade came on 10th.We have to take the trade on 13th.Let’s open the Bank Nifty chart. So on 10th, this is the date.
This was the signal. When the market was down, it identified that the market is weakening. Now we will make a trade on the next day. The market opened on 13th.It was around 40,400. After that, the market went up. We got the closing price of 50,600. When will we make a trade? We will make a trade on the next day after 9th and 20th.How did the trade happen? What is the return till now? We can back test the strategy. We will open the trade recap. We can see how the trade behaved historically.
Let’s see the 10th in Bank Nifty. We saw that the trade came in the put writing trap. That is a weak signal. Let’s simulate the trade and see how it behaved till 13th.We will see the current expiry. Let’s see the trade and put option. Let’s see how the trade moved. We have opened the trade recap.
We will go to the new strategy. We will select Bank Nifty. We are trading on 13th.Let’s see the trade on 9th and 21st.Let’s see the trade after 1 minute. Let’s see the trade on 16th March. We can see the trade after that as well. We should trade according to the trader’s trade. If someone trades on the same expiry, what would be the profit and loss? The market was around 40,600. It closed and is still running. We can buy the put option of 40,600. The price is around 280.We will buy this and do 900 quantities. We can simulate this trade. Let’s go to the next day. Let’s see the next day. Our expiry will end on Thursday. Let’s see the price on 9th and 20th.We will know the price of 280 in the next day.
You can show the P&L by highlighting. Yes, it will go back. You can see the market. The market fell in the next day. The premium of Rs.200 is almost Rest. 1000.The trade is still there. You can see the P&L here.Rs.7,26,000.We can do this on the expiry or the next day. Let’s see the next day. The market fell after that as well. We will cut it on the expiry. The market came up a bit that day. We can close it on the 16th.Let’s go to the expiry. Let’s do 20. We will cut the position around this. At 3.20. The expiry will end.
The theta decay will also happen. We will cut the position. The profit is at 1400.The premium of Rs.280 is around Rest. 1450.The signal is still on. You can see how much money you can make out of its you have generated a profit of around Rs.10 lakhs from this strategy. If you had bought the naked put option. We can try different strategies on this. Some people do spreads. You can even test that also. If there is a trending move, money will be generated in different strategies. Some will generate more and some will generate less. That is the power of trap. If you look for this in a stock, then it will be in the stock phase.
Go back to the trap. Show it again. People will understand how the signals come. If there is an exit, people should know that money is being generated. When do we exit? For exit, the signals are on. It will show the exit in this. Till the time the trade is on, we have to keep looking at the screen. That signal will remain in this screen only. For example, if the trade of Dabur came yesterday or today. Now on 23rd, the stock is 3% positive. If the writing trap is ending, it will give you the exit signal.
You are saying that the exit will be written in front of the close price. If the exit is written, it means exit. Yes, it is possible that all the positions will not go in profit and all the losses will not go in profit. The one that went in profit, even if there is a loss, it will give you the exit to exit. Absolutely. Suppose we took a trade on a trap and it went wrong the next day.
What can we do? If it shows exit, we can’t exit. If it went in profit, it is possible that it carried for 5-6days.If the track is over, it will give you the exit and you can take the exit. We were entering the market according to your signal on the next day.
But we will exit on the same day. Yes, you can do this. This is subjective. But mostly, if it is showing exit, then it will exit on the sameside. It is a rare case that it will fall on the market the next day. It is not like that. If the signals come daily, then trade another signal. Or it can be another approach that if you have taken the entry the next day, then take the exit the next day. Search Nifty in Stumble. For example, your position is on for the signals. If you are saying that when the exit will come, then the exit will be written here in front of the price.
If the market goes up by 3%, then it will be 3.5. And if the signal is ending, then the exit sign will be written here in front of the price. If the market falls, then the return will be 3.5. Whether it is profit or loss, it will give you the signal that the track is complete. If we had taken this trade and the market had gone wrong, and it could have gone negative by 1% or 1.5%, and it feels that the signal is over, then it will exit me in a negative return. How much is the accuracy of the strap indicator?
According to me, it works well. If you talk about the normal probability, then this particular thing has a good accuracy of 70%. It exits very easily. And it is a trending move, so you will be able to find it easily. So the returns of the index or the returns of the stocks or there turns of the options will be much more.
Obviously, this is the return of our futures, 3%. And if the return of futures is 3%, then obviously, you will be able to trade 3-4 times more. So this is the return of futures. You can imagine and trade and see how fast the option will run if your underlying moves this much. We simply bought the ATM option and you saw the results.
Simple right? There is no question in this. I think people have understood the trap indicator very well and we have tried to explain the concept with clarity. If you are watching on Instagram, you will get it in the bio. There are many free features and paid features.