How To Discover Volatile and Not-Volatile Stocks For Applying Options Strategies

bull put strategy option trading

I’m writing this post in response to a Twitter friend who tried the Long Strangle Options strategy on a relatively steady stock, Maruti.

It didn’t work for him, and he asked this question:

So, well, this post will help you discover volatile AND steady stocks on which you can apply Options Strategies.

Before we move ahead, you should read up on the following Options strategies:

LONG STRANGLE (works only on volatile stocks)

PROTECTIVE COLLAR STRATEGY (works only on stocks that are expected to be steady in the short term and bullish in the long term)

SHORT STRANGLE (works only on stocks that are expected to be steady in the near term. Note that this is a slightly risky strategy as it involves shorting.

HOW TO DISCOVER VOLATILE AND STEADY STOCKS

METHOD 1: NSE WEBSITE

A. Open

Open NSE Daily Reports and select “Derivatives” Tab

how to find volatile stocks

Choose “Historical Volatility” in the Derivatives section.

how to read NSE derivatives data

When that page opens, choose “Daily Volatility Files,” select the previous trading date and download the file.

It will be a CSV file. Open it in Excel, select all rows and columns, and now sort Column G from “largest to smallest.”

NSE volatile stocks data download

In our example, PC Jewellers, RCom, R Naval, Star and JP Associates are the most volatile.

The least volatile stocks will feature at the bottom of the stock. Remember not to consider Indices and stocks that feature in volatile sectors (For example, HDFC Bank volatility was among the lowest, but it sees days of massive volatility because it is used to manage the index.). Choose stocks like PowerGrid, NTPC, etc., which are relatively steady.)

METHOD 2: STOCKS IN THE NEWS

Once a FNO stock gets in the news, for the right or wrong reasons, you see massive volatility. Latch on to it on the first day the news breaks. Examples: Fortis, PC Jewellers, HCC, RNaval, Wockhardt.

METHOD 3: RESULTS DATE

FNO stocks react sharply on results day. Though the results season is over now, there will be many more to come.

This is how you discover volatile and steady stocks to apply options strategies to.

Do not start option trading unless you perfect the techniques using paper trades.

19 Comments on "How To Discover Volatile and Not-Volatile Stocks For Applying Options Strategies"

  1. It’s wonderful post for the learner like me. God bless to share your knowledge

  2. Pankaj gupta | May 27, 2018 at 6:54 pm | Reply

    good information

  3. ankita mamta tomar | May 28, 2018 at 1:04 pm | Reply

    heloo sir , nice explanation by you for each concept , i have a doubt that should we also Have to calculate option premium ( OPTION CALCULATOR ) whether it is expensive or cheap ? and also how to select strike price for LONG STRANGLE (works only on volatile stocks)?

  4. Ankur Maheshwari | May 30, 2018 at 5:30 am | Reply

    Amazing knowledge sharing. Hope it remains free for all till a very long time.
    Thanks

  5. Great resource! Thank you! I used to use ATR % on my cgarting tool but it is a tedious process.Or use Nifty Highbeta Index constituents. But this is great!

  6. Sir, the file downloaded shows volatility for all stocks, how to arrange in descending order, that means highest to lowest volatility stocks

  7. Hello Mr Sunil,
    I suggest readers to check out https://stocksfetcher.com/volatility-beta-stock-risk/
    to understand beta & volatility. Also the list of the stocks with low beta, high beta, low volatility, high volatility is given there.

    • sunil.tinani | June 3, 2018 at 6:40 pm | Reply

      Hello, how can anyone determine volatility for the long term by publishing a fixed list of stocks. Volatility keeps changing, isn’t it? I don;t agree with the fixed list.

  8. Hi Sunil, I have been reading your posts for a while. It is commendable the work that you are doing and sharing your knowledge without any expectations. Regards, Baldev

  9. Paper Trading, which would be a good website?

  10. Dear Mr. Sunil.
    Am very raw in derivatives. How can I gain knowledge onto it & practice it masterly. Any recommendations pls.
    Thx

  11. After filter of Colm g from lar to small can I consider top 5 or 10 stocks as volatile for day ..and among top 5 how to choose best 2 …for trade intraday cause u can’t trade all 5 it will very costly

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