Strategy recommender for stock options in india using deep learning and live stock data from NSE

Abstract

An Option is a financial instrument, which is extensively used in share markets, money markets, and commodity markets to hedge the investment risks. It acts as financial leverage investment and is a kind of derivative instrument along with forwards, futures and swaps, which are used for managing risk of the investors. Though derivatives are theoretically risk management and leveraged investment tools, it is mostly used as speculative tools. The objectives of this work is to build a positional stock trading strategy in derivatives (Options) and recommending the users the strategy based on the predicted price of the stock, and, to generate P&L charts and Payoff graphs based on different Options strategies selected by the user. For this, the stock market data is collected from various online sources such as NSE, and BSE websites. The contributions of this work include, a comparison of various strategies and to predict the range of the stock based on Implied Volatility (IV); providing the user with the Option Chain and enable to calculate several Options indicators like PCR, Max Pain; and, the implementation of machine learning algorithm (LSTM) to predict the sentiment of the stock. An interactive web application for users is created, which provides consolidated data in the form of a dashboard from where the users can analyse the stocks and make strategic decisions on procuring stocks.