Institution Option Trading Part-3

How Option Database Trading Works (Step-by-Step)
Step 1: Data Collection
Real-time data from NSE, BSE, CBOE, or broker APIs (Zerodha, Interactive Brokers, etc.).

Store tick-level or EOD snapshots into SQL/NoSQL databases.

Step 2: Data Cleaning & Normalization
Remove missing values, align timestamps, convert formats.

Normalize values like IV to make models consistent.

Step 3: Exploratory Data Analysis (EDA)
Use Python (Pandas, Matplotlib) or R to analyze:

Option volume spikes

Volatility contraction/expansion

Unusual OI build-ups

Step 4: Backtesting Trading Strategies
Strategies like Straddle, Strangle, Iron Condor, or IV Crush are tested.

Entry/exit logic coded, and trades simulated on historical data.

Step 5: Deploying Models
Successful strategies get automated using APIs or Trading Bots.

Regular performance metrics tracked and refined.