top of page

Abki Baar 400 Paar Slogans Worked Well! Is it Buying or Short Covering?

Lack Of Negative News

India’s benchmark Nifty witnessed a spectacular session of short covering in today’s session. The index opened by gap up of 800 points, made a high of 23,844 intraday and closed around 23,450. The important question is why this short covering happen did and did it make sense to wait till the market opened today for confirmation before going long? The answer is a BIG YES. The 3D Delta system had indicated the presence of longs in the market on Friday itself (31st May 2024) and gap up opening was required in Nifty today to trigger fresh buying. It was a precisely calculated mathematical move to maintain high levels of accuracy.

Market analysis and speculation are not the same. Market analysis involves mathematical calculations and highly efficient systems to generate consistent returns for those who trade for a living. The 3D delta system used Black Scholes principles to pinpoint today’s short covering and generated accurate entry points. Hence those who waited for confirmation till the market opened today were given ample time and the best entry points to go long in Nifty.


How Did The Institutions Manage Their Overnight Buy Positions?

To the naked eye, yesterday’s and today’s market moves might look vague and diluted that is exactly what separates the retail clients from the institutions. Retail clients hardly ever accept the mathematical realities of the market. They are mostly swayed by the news and never focus on the math behind the news. This is what leads to the wrong entry and stop loss regularly. Take for example today, the market failed to open gap down, this was the turning point and the biggest hint of short covering. The lack of negative news coupled with a gap up opening at 23,501 caused an inverse drift in the Implied Volatility of put options. The gamma-vega covariance factor dropped below the expected range. This forced the institutions to wrap up the shorts and Nifty rallied. Traders who thought yesterday that they would miss this opportunity to go long were rewarded for their patience with binomial neutral price points. What is more important is it also gave enough confidence to execute a long trade.

How To Trade Bank Nifty 

Bank Nifty trades are some of the most lucrative opportunities traders can tap into. Since the index commands high Vega shifts under a short window, options traders can bag big profits by taking small risks even on the expiry day. All you need to know is the broader trend of the market based on the Black Scholes calculations. Take for instance today’s scenario, Bank Nifty opened almost 2000 points gap up, the 3D software indicated that long positions can be created to ride the up-swing as there was no negative news in the market. Longs were created in the market from 16th May 2024 (as indicated in 3D Delta).  To test the accuracy of the software, the 49,500 Call option was bought @ 740 and 50,000 Call was sold @578, thus creating Bull Call Spread at 163 Debit on 31st may 2024 with weekly 5th June contract. Maximum loss is 163 points and maximum profit is 500 points so it poses a decent risk reward. Bank Nifty swung up 2,200 points from there. The trade is running at INR 390 which is whopping 140% return with a very low downside and the trade is still open. The question is, “Is it possible to catch these moves”? YES, IT IS!

14 views0 comments


bottom of page