A Study on Developing Effective Option Trading Strategy On Nifty Index in National Stock Exchange using Data Mining

In Today’s world technology covered major fields. The stock market from inception has given excellent returns over the years, but some impatience investor losing money because of volatile market. In stock market option derivatives are widely used tool for risk management in whole world. It is tool which provides right to trader to trade in particular assets. To get right trader has to pay premium while opt to an option contract. This premium is expanse for option buyer and return for option writer. The objective of the research is to derive profit making Strategies on nifty 50 in option derivatives by selling option. There are lots of techniques available to work in option segment for index and stock. Researcher has applied short strangle strategy in nifty 50 index. To evaluate strategy researcher has undergo with last 5-year Nifty index data and retrieved sure shot profit making techniques as a result set with different probability. Strategy also checked using 3 different data mining cluster algorithms like Expectation Maximization (EM), Simple K means and Farthest First were applied using WEKA. Research has also tried to find out different guidelines to minimize the loss if any.