Generally, VWAP is used to know the strength in a buying or selling. VWAP means VOLUME WEIGHTED AVERAGE PIRCE

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👉when price starts rising it would be pulled back to VWAP line. Then buyers would again rush in to buy the stock taking price higher.

👉If we compare the CALL and PUT charts, we can identify the correct entry. On trending days VWAP acts as support/resistance.
👉If market is trending UPSIDE, VWAP acts as support in CALL option charts of ATM STRIKES and same VWAP acts as RESISTANCE in PUT option charts of ATM STRIKES

(Use VWAP on 5 minutes chart on OPTION CHARTS)
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👉If market is trending DOWNSIDE, VWAP acts as support in PUT option charts of ATM STRIKES and same VWAP acts as RESISTANCE in CALL option charts of ATM STRIKE
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👉We can take the entry or average the buying price of an OPTION when price comes near to VWAP with STOP LOSS PRICE below VWAP

👉VWAP also helps in identifying the trend and also gives good Risk:Reward if followed in long run
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More from Swapnil Kommawar

How I trade monthly short strangles for regular income

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👉Short strangle means,
Selling OTM call option and Selling OTM put option

Here is a detailed thread on short strangle


👉Generally, this strategy gives good returns when market is sideways but most trader get wrong entries and wrong exist

👉Ahead of major event option price will increase because of uncertainty. We have to take advantage of that

👉As the VIX is the derivative of option price, we have to check this parameter first

When VIX is >20, it is the right opportunity to deploy short strangle

👉If we look at the weekly and monthly candles of nifty, it is easier to identify which strikes to choose

Entry conditions:

👉VIX >20
👉Choose the strikes which are 6% above and below of nifty in next month contracts
👉Combined premium should be in the range of 160-170
👉Next month contracts should be taken at the mid of current month

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