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Why Did Nifty Crash?

 

India’s benchmark Nifty future corrected 810 points in last 9 trading sessions. So what really went wrong, why did markets fall? Why was it different this time?  The 810 points fall had a mathematical element of surprise as the move was pre planned by market makers. Retail clients also can replicate these moves if they can determine the point where the theta overshoots its neutral threshold. We all know that the March 2024 Futures contract will merge with the underlying next week. This move will trigger a stunning acceleration in theta decay. Therefore the idea is to take advantage of this thumb rule with the help of specific option strike analysis. Traders going all haywire for overnight FOMC and here, Traders at Amplify has already finsihed the job. Smart money has already won the war and retails as usual are clueless. PREMIUMS NEVER LIE. Very Understated word. PREMIUMS will become a MULTIBAGGER SOON! MARK MY WORDS..




Why Did Nifty Fall? (Fair Value)


Step one is understanding what the market maker is trying to do, step two is about calculating the fair value of an option strike based on the contract they are trading. This is why it is important to ask why did we target the Call option in the morning and not the Put? This is because, when we used the 3D Delta software yesterday, we found that the market makers were building shorts from 11th March 2024 by fixing 22,501 as a very pivotal VPOC (Value Point Of Control).This is where the scenario got interesting, Nifty 50, since 11th March has not even come close to 22,501 as closing and we witnessed 810 points of correction so far. We got a follow up seller on 13th March. Kindly refer the screenshot 1. (Circle in red is sellers)



Trading Without Predictions


Trading can be very rewarding if we avoid predictions and follow the institutional traders during mega events like the FOMC policy. Most traders would pop question like, what if I miss out. The answer is, stop spinning those unnecessary ideas in your mind. Simply avoid building positions when the market makers do not participate. In this week’s session for instance, it was very simple to execute shorts. All we needed was a gap down opening and the arrival of the binomial price. Once the binomial price triggered, we went short in 21,900 CE 21st March 2024 contract options. The 21,900 CE was sold at INR 225 on 18th March 2024 and Nifty plunged 422 points from 18th March. The call was later squared off at INR 81.



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