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Lesson 1- MarketView

Updated: Apr 8, 2021

Welcome to the advance option trading article. In our previous article, we had discussed the outline of our future article. We had discussed what we will be doing in the coming article. We're learning Option Strategies. We have already completed our basic article regarding options trading and if you have not read the basic course article, please go through and read them. It will be very helpful for you to gain some knowledge.

If you already following us, then you might be knowing that in this article, I am going to talk about something like a horoscope means like I want to talk about the market view. So, first I want to remind you there are four steps of every option strategy. The first step itself is MarketView. The second step is option study itself. The third is the adjustment and the fourth is exit rules.

So, the first step is what market view is? Now, if I tell you that market view is almost 80% responsible for the success of your trading but it is difficult to predict the market correctly more than 60% times. So, you can understand that it is necessary to know that you cannot do anything without having a market view and you cannot judge market view correctly always.

But there is a way to tell you that there are some indicators who can give you some hints but again those things are not 100% guarantee. They will not work always but if you give them at least sometimes, you can increase your chances of success. The first important thing is what is the market view? Why it is important and what are the various indicators for the market view?

I am going to tell you in this article so that you can understand it. Here we are going to understand how we make sense out of nonsense data. For making a market view, you can say you have to make information from noise in the market. There are lots of kinds of information data always keep following. You have to filter out the information from there and then from that data, you have to make the information and you have to find the knowledge and from the knowledge, you will get the wisdom which will help you to make a market view.

Now how people make market view? What is the market view? To understand and to make a perception about the stock market whether it will be in the bullish or bearish phase. It cannot go anywhere maybe sideways but you should know all the ways where the market is heading. So, that's why you have to read the market view because if you don't understand the market view, you don't know which study is going to work in the particular market.

Every strategy has pre-requirements that you should know what is the market view so when I need to teach you the Options Strategies, you should have a bullish market view for this study or you should have a bearish market or sideways also. That's why we have to make a market view even if it's not what you are thinking of. People who do a lot of research on the future with the idea and I feel invincible that they know the future. If their view is correct, they put a bigger bet and what happened they have got a bigger profit sometimes but they get into a lot bigger losses which happened most of the time.

So, it is very hard to predict the future or to make understand to know the future even the people with supercomputer are not able to do it. So, I don't think we have the best resources and disposal so here I want to say you that the market is very unpredictable. What is going to happen in one month to 3 months is not sure but in the back of the mind always remember that market can prove you wrong and that's why step number 3 which is the adjustment is necessary.

The market is going to prove you wrong then what you are going to do? You should decide before you enter into the particular trade with that I am going to share one market view with you which I use for myself and then I will show you the indicators in later articles, I will explain one by one all the indicators that how you are going to read those indicators and how you are going to use other information with some common sense and how to make the best case and separately I am going to tell you what you are going to do if the market is going to prove you wrong.

This whole article I am dedicating to all those people who are passionate about the option. So, the first important part is what I do generally I make a prediction for 3 months generally and after that, I make a monthly prediction which is the current month prediction, and then if it is required, I have to see some of my position on weekly basis. I make a prediction weekly also how the market is going to perform in that week and if it is required like you have to check every day then you can make the market view daily also.

You can make your prediction as per the requirement as I told you. I am going to share the fire and forget strategy with you so you don't have to make it daily prediction but it will be advisable if you make at least weekly and even you don't make it fine because in most cases you know this is the profit and this is loss and you don't want to make any kind of irrational thoughts about it.

Some of the dates used like future open interest, highest call open interest, highest put open interest which gives me about the support and resistance in a particular month then what is the change in PCR (put-call ratio). IV percentile which tells me whether the Nifty is very volatile or not if it's very volatile generally the benefits are going to go up to reduce. That is how you can make predictions.

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