Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Nifty Futures Market Profile and Lower Implied Volatility

1 min read

What could you do when the movie is boring and you are forced to watch it? It’s the same thing one could be experiencing if anybody trading Nifty Futures actively for the last two months. Dull boring volumes and more price rotations with a lack of market participants in the last two months brought sleepy times during market hours most of the time. And thanks to the markets for showing kindness this week with elevated trading ranges.

After a long time, the structure of the Nifty future has been dominated with more of Poor High / Poor low in the last two months and definitely lack of higher timeframe domination, and most active markets are being dominated by short term traders and intraday traders. That makes to wonder why in the last two months what makes the investors not actively participate as Nifty is nearing the all-time high.

More and more crowded short-term sellers are dominating this market and that indicates that buyers are getting late to the party and the party is not over yet. Laggard buyers been competing in the current market environment

Nifty Hourly charts running in a rectangular consolidation for about 7-8 weeks of duration in a very narrow and tighter band and brought extreme exhaustion twice and making its attempt one more time towards 16,000 levels but the crowd is there to cheer at higher levels this time.

Though the immediate trend is an upside. The upside looks seriously limited to 200-300 points from current levels. Market Context with reduced volatility indicates that more overcrowded trading is happening and a couple of days from here Nifty futures could be running at euphoric sentiment and bit of warning bells if Nifty fails to hold above the psychological levels 16000 in the near term.

As of Friday’s closing, Nifty Implied volatility stands at 11.34, and IV Percentile stands at 0.4 indicating few more boring days ahead before making a u-turn. India VIX sliding down indicates a lack of participation and absolutely no demand from Out-of-the-money (OTM) Option Buyers.

Intraday Straddles and Strangles are comfortably running in the town with no or lesser damage to the portfolio. And option sellers are freaking of this ultra volatility and cutting their positions on every panic dip/freaky raise and there is hardly any premium left for them to slurp at current IV levels and hardly any trend visible despite the earning season. Option Buyers are winking as hardly any price action happening.

Totally this market has been testing the patience of traders to the core. August series has 72% odds of trading between 15192.0-16408.0.

Hoping for better volatile August series!

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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