Why Bank Nifty Call Options Rose Exponentially
Bank Nifty call options rose exponentially in today’s session. The index was hit by volatility, as it swung up 400 points from the low of 30278 and made a high of 30678 approx. The 30600 Call options strike which we discussed yesterday rose 378% intraday. The 3D Delta system indicated in the morning that institutional traders had entered the market and bought Bank Nifty Call options. Today’s upside swing was meticulously planned ahead of time. The institutional traders waited for the gamma-vega covariance factors to fall in line with the Binomial price and then went for the kill. The Call options witnessed a massive swing from the low of Rs. 28 to register a high of Rs. 133 approx.
How Did They Pull Off Such A Trade
Institutional traders used IV Estimation to pinpoint today’s big opportunity. Bank Nifty contracts trigger IV swings at least once every week as we had mentioned earlier. The banking index throws up massive opportunities for intraday traders in these time bands. These are the zones where the Institutional Traders enter the market and trigger their trades. The returns as we all witnessed today was explosive in nature. The 30600-Call strike generated a whopping 378% return intraday!
Re-Constructing Today’s Session
Institutional traders entered the market early today. The 3D Delta software captured their entry point with extreme precision. To test the accuracy of the system, the 30600 Call was bought exactly where the institutional traders entered. The system also calculated that Binomial pricing and the covariance factors were used to generate the entry and indicated an upside target of Rs 120. Bank Nifty was soon hit by volatility and the 30600 Calls met the upside target of Rs.120 and went on to register a high of Rs133 approx. The call was later squared off @ 83.70
Traders Must Evolve With Time
Retail traders must improve the way they analyze the options market. Primitive and lagging tools like Open Interest Data is of no good when trading options. Bank Nifty Options are governed by the laws of Volatility, and a discrete Time stochastic process. Black Scholes involve mathematical skills. However, automated systems like 3D Delta can compute these prices all by themselves and are better as Bank Nifty is a volatile instrument and manual calculations don’t match up with market speed.
Bank Nifty Options Data