Thread by @SubhadipNandy16

To mentally take a break , as it was getting exhausting psychologically, went back to charts. Analysing BNF to explain what I saw on Friday which prompted me to carry shorts

COI started increasing over past two day, short buildup as price down+COI up. This is OIV Analyzer end of day

Now see the realtime charts. understand the context. The rise in COI over the day got trapped in the last 30 min selloff. The whole COI builtup has an average price of around 32k. Downsides may be in this manner :
below 32000--->31800
below 31800--->31400
below 31400--->30500

Like everything, this is a probability..not a sureshot. Hence I went in with a put backspread
Sell 1*32kpe +2*31500pe
A backspread is in essence a volspread, I am long vols. So a fall should spike up vols which should help me as a buyer. Read :
zerodha.com/varsity/chapte…

I knew HDFCBANK was coming out with results on Saturday. If results were more than expectations, then BNF would go up. A put backspread is a defined risk strategy which will have limited loss if BNF goes up ( my debit is around rs,75, I will be able to bet out at 30-40 loss)

The risk increases as we go to the end of expiry with max loss if BNF expires at my bought strike, i.e 31500. This zone is called the valley of death.
But I am not going to hold this after tomorrow whatever happens, so I am safe from the valley of death

This is a powerful safe strategy if you are expecting a large move on one side. If you are horribly wrong and the market does opposite, you can be out with a defined loss. Play this strategy in the early part of an expiry, not near the end

Made a mistake on the eod OI screenshot, apologies ( old screenshot posted in mistake.
This is the correct pic