In long term averages, 150 EMA is smaller and 200 EMA is larger

average.
In short term averages, 13 EMA is smaller and 21 EMA is larger
average.
Clear Buy signal needs to fulfil the following criteria:
1. Closing Price should be above both the averages
2. Smaller average should be higher than the larger average
Clear Sell signal should have:
Closing Price below both the averages
Smaller average should be below the larger average
13, 21, 150 & 200 exponential moving averages on closing basis.

•RSI Above 55: Long

We can Sell Put or Buy Call, but only when RSI is above 55.
•RSI below 45: Short
We can Sell Call or Buy Put, but only when RSI is below 45.
•RSI between 45-55: Neutral
No directional trading zone when RSI value is between 45 and 55.

For Bullish Stocks

Daily RSI greater than Weekly RSI, and Weekly RSI greater than
Monthly RSI, and all three RSI above 55
For Bearish Stocks
Daily RSI lesser than Weekly RSI, and Weekly RSI lesser than Monthly
RSI, and all three RSI below 45
RSI Momentum Score Selling Buying Hedging
below 30 Very Strong -4 100% +PE 100%*
Short
30-35 Strong Short -3 75% +PE 50%*

35-40 Moderate Short -2 50% 0%

40-45 Mild Short -1 25% 0% Yes

45-55 Neutral 0 0% 0%

55-60 Mild Long 1 25% 0% Yes

60-65 Moderate Long 2 50% 0% Yes
65-70 Strong Long 3 75% +CE 50%

above 70 Very Strong Long 4 100% +CE 100%

For option writer:
No Call writing position below RSI 65
No Put writing position below RSI 40
*For option buyer:
Put buying preferable to Call option buying

Comparing RSI of two different time frames for better trading results
gives us the Relative RSI score.

Relative RSI YE NO
S
Weekly > Monthly 1 -1
Daily> Weekly 1 -1
Hourly > Daily 1 -1

e.g. If hourly RSI higher than daily RSI, and daily RSI higher than
weekly RSI, and weekly RSI higher than monthly RSI, then this setup
is strongly in favour of longs; buy the dips and look for momentum
play.
Theta is used to determine which expiry to trade.
During initial part of the month (first 13 days), week (Friday to
Sunday), or day (upto 11AM), there’s hardly 10% theta erosion.
During the middle part, 30% theta decay occurs.
Major chunk of theta decay occurs during later part of the month
(first 20 days), week (Wednesday or Thursday), or day (after 2 PM).
Option writer will not square-off his winning trades before these
periods, while an option buyer will not allow his losing options to
remain open after these periods.
Vega is useful during event days. Gamma is useful on expiry days.
For options buying:
Far expiry* is always better than near expiry
Monthly expiry* is better, as there is less price decay Reverse is true
for Selling.
Buy: Rising ADX with RSI showing strong momentum (above 65 or
below 35) gives better results in options buying (or in futures
trading). An option buying opportunity on Friday (& even on
Monday) must be definitely captured as there is very less theta
decay.
Sell: Option selling** is more beneficial when ADX is falling. On
Wednesday & Thursday, in a momentum setup, avoid option buying,
instead go for option selling with bit higher delta.
In non-trending states, Sell Far OTM options. In trending states, Sell
and Buy both can be done.
*Far/Monthly expiry has less liquidity
**Options Selling should always be with hedging
For all Bearish conditions (RSI < 45), we can Sell Calls
Buying of Puts only when we have strong Bearish (RSI < 35)
indication
If you are selling puts for hedging against call option writing
positions, then it should be done upto score -1 or -2 (RSI 55 to 45)
only.
No hedged put option selling below RSI 40.
For all Bullish conditions (RSI > 55), we can Sell Puts
Buying of Calls only when we have strong Bullish (RSI > 65) indication
If you are selling calls for hedging against put option writing
positions, then it should be done upto score 1 or 2 (RSI 55 to 65)
only.
No hedged call option selling above RSI 65.

• Always keep in mind that Put option buying gives better returns
then call option buying given similar conditions, because of
increased implied volatility. Long-only players (Pension funds, LIC)
& HNI often hedge their portfolio during market sell-off by buying
Puts. So, during sell-off, there is high demand for Put options. Such
a scenario is missing in Call buying.

Delta is used for selection of strike price

• Option buyer: Delta 0.5 or higher (Always Buy ITM or ATM options)

• Option seller: Delta 0.2 or less preferred (Always Sell OTM). For
directional option selling, you can select Delta upto 0.3

My first focus on selecting strike price is always the last closing price
plus or minus ATM straddle. The strike price where the difference
between call and put is minimum is the ATM straddle (Jodi Bhav).
The expected range based on ATM straddle gives us the Call and Put
strikes to trade for a Short OTM Strangle.

Expected range based on ATM straddle (Jodi Bhav):

• Upper limit = closing plus straddle = Call strike selection for OTM
strangle

• Lower limit = closing minus straddle = Put strike selection for OTM
strangle

Generally these ranges are around 0.2 delta, so it becomes little easy
for selecting strike. This, however, is the minimum range, it’s always
better to select strike as per delta (0.2 or less).
• For Weekly expiry, we should use 15 minutes (or 30 minutes)
candles from market opening to 3 PM. But for carrying forward
positions to next day, we must shift to Daily chart after 3PM.

• BANKNIFTY is high beta, so 15 minutes chart (in combination of

hourly chart) is preferred. Conservative traders should use hourly
chart (in combination of) daily chart.

• For low beta stocks and indices, 30 minutes chart is preferred

• Hourly is considered father of both. In case of any confusion, take

guidance from father.

• For Monthly expiry and for Stock Futures & short-term trades,
Hourly chart is preferred.
• For Delivery based medium-term trades, Daily charts are to be
used.

• For Long-term investments, Weekly charts are to be used.

“Please note that in 15 minutes charts, we have 25 overs game for

one day and overall 125 overs test match for the entire weekly expiry
period”

Details:

In one day, we can get 7 candles of 1 hour each, or 25 candles of 15

minutes each.

In Weekly expiry, with 1 hour time frame, we get only 35 candles,

which are too low to capture the movement of weekly expiry. With
15 minutes time frame, we get 125 candles in weekly expiry enabling
us to spot the trading opportunities better.

In Monthly expiry, with Daily time frame, we get around 20 or 25

candles in a month which is too low to capture the movement. With
Hourly time frame, we get around 140 candles in a month which can
easily capture all movements worth trading in the month.