APIBridge Nifty Options Algo Strategy

10 de out. de 2022

Using Pinescript, we will use charts of Cash/Future to trade in Options. Note this strategy works well with even the free version of TradingView.

The Relative Strength Index ( RSI ). Is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Increasing RSI shows increasing bullish momentum. Decreasing RSI shows increasing bearish momentum. We take RSI upper bound as 80 to indicate bullish momentum and RSI lower bound as 20 to indicate bearish momentum.

We use the above premise to create options buy-only strategy which trades in ATM strikes by default. This strategy requires very less margin (Minimum Rs . 15000).

Since this strategy uses underlying data (cash/future) to place trades in Options, please ignore the backtest of this strategy given by TradingView. TradingView does not provide options data but this strategy bypasses it.

Strategy Premise
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Increasing RSI shows increasing bullish momentum. Decreasing RSI shows increasing bearish momentum. We take RSI upper bound as 80 to indicate bullish momentum and RSI lower bound as 20 to indicate bearish momentum.

We use the above premise to create options buy-only strategy which trades in ATM strikes by default. This strategy requires very less margin (Rs. 15000 should be sufficient).

NSE Options Algo Strategy Logic
Long Entry: When RSI goes above 80, send LE in an auto-calculated option strike Call. When RSI goes below 20, send LE in auto-calculated option strike Put.
Long Exit: When we hit Stop loss or Target. In case SL/TGT does not hit and reverse RSI goes above 80 send Long Exit in auto-calculated option. Put as per last trade; RSI goes below 20, send LX in auto-calculated option call as per last trade.

For Long and Short entry the order is fired in the option buying side with auto strike price selection.

Option Strategy Parameters for TraingView Charts

• RSI Length(Mandatory): Number of bars used to calculated RSI.
  
• Upper Band(Mandatory): To specify upper band of RSI.
  
• Lower Band(Mandatory): For specifying lower band of RSI.
  
• Use reversal from Upper Band (Optional): This will enable short entry when RSI is falling below 80 from upper band. Recommended to keep unchecked initially.
  
• Use reversal from Lower Band (Optional): This will enable long entry when RSI is raising above 20 from lower band. Recommended to keep unchecked initially.
  
• Quantity: We use this specify the trade quantity (for Nifty min 75)
  
• Custom Stop Loss in Points: Movement in chart price against the momentum which will trigger exit in options positions
  
• Custom Target in Points: Movement in chart price against the momentum which will trigger exit in options positions
  
• Base symbol: This is the base instrument symbol like NIFTY or BANK NIFTY.
  
• Strike distance from ATM: Our default strike selection is considered as first ATM option (with nearest distance, only 100s are considered ). This strike
• distance allows to calculate ATM options which are at fixed distance.
  
• Expiry: Expiry of option. Weekly and monthly both expiry are allowed.
  
• Instrument: For index instrument will be OPTIDX, for stock instrument will be OPTSTK
  
• Strategy Tag: The Strategy of Nifty options configured in Api bridge.
  

Setting Up Alert
Before setting up the alert make sure that you have selected desired script, time frame, strategy settings, and APIbridge configuration. Click in settings add alert and paste {{strategy.order.comment}} in message box.

Important: Do not change any settings during live trading. It may break the sequence of exit for the correct call/put.