OPTION CHAIN ANALYSIS – A Kaleidoscopic view - WITH REFERENCE TO INDEX BANKNIFTY OPTIONS AND INDEX NSE OPTIONS

The derivatives market is considered to be very volatile in nature as it fluctuates frequently which in turn makes it more risky. A careful analysis of the financial instruments is to be carried out in order to minimise the risk and earn unlimited returns. Options are mostly used for the purpose of hedging as they help to limit and minimise the risk element. Options allows the investors to enjoy the right as they are not obliged to execute the contract at a certain price on a future date. Option chain analysis is one of the methods used by the researchers to predict the market trends in case of options trading. This is usually done by significantly analysing the components of the option chain such as open interest, LTP, volume and the respective changes in these components. The present study attempts to evaluate the functioning of the option chain using open interest, LTP, volume and their respective changes by considering the index BankNifty options and the index NSE options.