Today, we delve into a crucial topic with none other than Mr. Nitin Mural, a seasoned expert with extensive experience in option trading. The focus of our discussion revolves around the growing addiction to option trading, particularly in the fast-paced world of intraday trading. Many individuals are drawn in by the allure of substantial profits showcased on the internet, fostering unrealistic expectations.
It’s a common scenario – individuals, inspired by success stories, dive into option trading with dreams of significant gains. However, the harsh reality, as disclosed by SEBI, is that 9 out of 10 traders end up incurring losses, with an average loss exceeding ₹50,000. Astonishingly, despite these statistics, many persist in the belief that they will emerge as successful traders, undeterred by the cautionary warnings.
So, why do most traders end up on the losing side? How can these losses be mitigated? Mr. Mural, drawing on his extensive experience and SEBI registration, imparts valuable guidance to those navigating the challenging waters of option trading.
First and foremost, the seasoned trader emphasizes the importance of avoiding over-leverage. Over-leveraging introduces a substantial risk factor, significantly impacting the outcome of option trading ventures. Secondly, Mr. Mural stresses the necessity of employing stop-loss strategies. These act as a crucial safety net, preventing catastrophic losses and fostering a disciplined approach to trading.
Moving on, Mr. Mural introduces the significance of utilizing effective tools in option trading. Technical analysis tools are essential, but the complexity of option trading demands an additional layer of analysis. Here, derivative data analysis tools come into play, providing insights that complement traditional technical analysis. Mr. Mural vouches for the efficacy of the SMC auto-trender, a tool he has trusted for years.
Opening the SMC auto-trender, Mr. Mural directs attention to the option chain data displayed on the screen. The option chain, he asserts, is one of the finest tools for derivative option trading. Crucially, with daily expiries for different segments, traders have ample opportunities to engage in intraday trading.
The focus shifts to the importance of analyzing the change in open interest. Mr. Mural explains that when engaging in intraday trading, understanding what is happening in the market on a given day is paramount. The change in open interest represents new positions initiated on that day, offering valuable insights.
Using the SMC auto-trender, Mr. Mural exemplifies how to assess the change in open interest for various strikes. For instance, if the total change in open interest is 63 lakhs, with 1 crore 65 lakhs in puts, it indicates a significant bias towards put options. This, he emphasizes, is a crucial imbalance that traders should be keen to exploit.
Calculating the imbalance ratio by dividing put open interest by call open interest provides traders with a clear picture of market momentum. A higher ratio signifies a substantial imbalance and a potential trading opportunity, while a lower ratio suggests market indecision and a likelihood of sideways movement.
In the dynamic world of option trading, success often hinges on the ability to identify market trends and capitalize on imbalances. Today, we delve into the wisdom of Mr. Nitin Mural, a seasoned expert with SEBI registration, as he unveils a powerful strategy for intraday trading using the Put-Call Ratio (PCR). This strategy not only aids in identifying market direction but also offers a systematic approach to entering and exiting trades.
To begin, Mr. Mural emphasizes the crux of successful option trading lies in recognizing opportunities amidst imbalances in the market. The key metric to gauge this is the Put-Call Ratio, calculated by dividing the change in open interest of puts by the change in open interest of calls. Today’s data, for instance, showcases a positive PCR, indicating a potential upward momentum in the market.
Understanding how to interpret the PCR is vital for traders seeking an edge. When the PCR exceeds 1, the market sentiment is bullish, as denoted by a green color. Conversely, a PCR below 1 is bearish and is represented in red. However, Mr. Mural underscores the importance of focusing on trades only when the PCR exhibits a significant imbalance.
In the world of options, where precision is paramount, traders should consider taking action when the PCR ratio surpasses 1.15 or falls below 0.75. This threshold ensures a more decisive trend, minimizing the risk associated with ambiguous market conditions.
The strategy is clear: wait for a substantial imbalance in the PCR before entering a trade. Mr. Mural advises against acting when the ratio is in the middle range, as this could lead to unpredictable market shifts. By patiently observing and waiting for a clear trend, traders can enhance their decision-making process and increase the likelihood of profitable trades.
The emphasis on PCR in option trading is justified by its ability to serve as a reliable directional indicator. Backtesting results reveal an impressive accuracy of around 65%, offering traders a quantitative basis for anticipating market trends. This predictive power instills confidence in traders and significantly reduces the chances of making misguided trades.
Moving beyond theory, Mr. Mural illustrates the practical application of this strategy in today’s live market. As the PCR remained positive throughout the day, indicating a bullish sentiment, traders were poised to capitalize on potential opportunities. The key to successful intraday trading lies not just in identifying the trend but also in strategic entry and exit points.
Mr. Mural’s strategy involves buying call options during market dips when the PCR is positive. This approach aligns with the bullish sentiment, and traders can leverage these opportunities for profitable outcomes. Conversely, when the PCR turns negative and there is a bounce around the VWAP (Volume Weighted Average Price), selling pressure is identified, prompting traders to consider put options.
A real-time example from today’s market showcases a dip around 12:45, where the VWAP stood at 1395 and the price dropped to 2355. Despite the dip, the positive PCR (3 times imbalance) presented a buying opportunity for call options. Traders who adhered to this strategy witnessed significant gains, with a call option priced at ₹90 surging to ₹160.
The key takeaway from Mr. Mural’s strategy is the synergy between PCR and VWAP. While PCR provides the direction of the market, VWAP becomes the strategic entry point. In a positive PCR scenario, buying call options during market dips around VWAP proves to be a winning strategy.
Today’s live market scenario showcased the effectiveness of this strategy. The positive PCR throughout the day aligned with the overall bullish trend. Traders who capitalized on call options during market dips around VWAP reaped substantial rewards.
In the complex world of intraday trading, the guidance of seasoned experts like Mr. Nitin Mural becomes invaluable. His strategy, rooted in the Put-Call Ratio (PCR) and Volume Weighted Average Price (VWAP), offers traders a systematic approach to navigate the market and make informed decisions.
The essence of Mr. Mural’s approach lies in identifying imbalances in the market, a task facilitated by analyzing the PCR. The PCR, calculated as the change in open interest of puts divided by the change in open interest of calls, serves as a powerful directional indicator. Today’s live market serves as an illustrative example, where a positive PCR hinted at a bullish sentiment.
Mr. Mural emphasizes the importance of trading only when there is a significant imbalance in the PCR. The sweet spots are identified when the PCR ratio exceeds 1.15 or falls below 0.75, providing a clear trend direction for traders to exploit. This disciplined approach ensures that traders engage in well-calculated moves, minimizing the risks associated with uncertain market conditions.
The strategy becomes even more potent when coupled with VWAP, a tool that adds a layer of precision to traders’ decision-making. The emphasis here is not just on identifying trends but strategically entering trades during reversals around VWAP. For instance, when a positive PCR aligns with a reversal signal around VWAP, the strategy advises buying call options.
Mr. Mural provides a real-time example from today’s market, showcasing the practical application of his strategy. During a dip around 12:45, with a positive PCR and a VWAP reversal, traders were prompted to buy a call option at ₹21,400. This option, initially priced at ₹115, surged to ₹135-140, allowing traders to book profits.
The second trade opportunity occurred around 2:30, where the market exhibited a bounce but failed to find support at VWAP. A discerning eye caught the lack of a reversal signal, prompting traders to buy another call option at ₹21,400, initially priced at ₹90. This option later skyrocketed to ₹160, exceeding the target and providing traders with a lucrative opportunity to book profits.
The simplicity of the strategy lies in the combination of PCR and VWAP. The positive PCR sets the direction, while VWAP acts as the tactical entry point. This synchronized approach enhances the success rate of intraday trades and empowers traders with a systematic method to navigate the complexities of the market.
Taking a deeper dive into the premium telegram channel, where Mr. Mural provides real-time trade recommendations, we can see the transparency of the approach. The trades are documented with entry points, stop-loss levels, and target prices, offering traders a clear roadmap to follow. The success of these trades is evident in the polls conducted, where a significant percentage of participants reported profitable outcomes.
The relevance of this strategy extends beyond regular trading days to the unique dynamics of expiry days. On expiry days, the approach narrows its focus to the at-the-money strikes, specifically one strike up and one strike down. This precision in strike selection minimizes the impact of out-of-the-money options, providing traders with a more accurate representation of market sentiment.
Interestingly, Mr. Mural advises giving more weightage to the PCR data of the instrument expiring on a given day. For instance, if trading on a Wednesday when Bank Nifty expires, and both Nifty and Bank Nifty have conflicting PCR data, traders should prioritize the Bank Nifty PCR due to its imminent expiry relevance.
As Mr. Mural guides traders through the intricacies of intraday trading, he underscores the importance of adaptability. The reduction in strikes on expiry days reflects this adaptability, ensuring that traders tailor their strategies to suit the unique characteristics of each trading session.
For those seeking direct trade recommendations from Mr. Mural, his premium telegram channel and autotrender software serve as invaluable resources. The transparency and real-time documentation of trades instill confidence in followers, while the efficacy of the strategy speaks volumes through the tangible success witnessed in today’s market.
In conclusion, Mr. Nitin Mural’s strategy brings together the predictive power of PCR and the precision of VWAP to create a formidable approach to intraday trading. The systematic identification of trends, strategic entry points, and disciplined execution set traders on a path towards increased success and profitability in the challenging landscape of option trading.