Through Rajesh palviya
Nifty, Bank Nifty Perspectives: In the current weekly series, Nifty has witnessed a short build with a -1.23% price drop and 1.39% OI increase from Tuesday when there was the addition of 1.29 lakh of shares in OI, going from 93.23 lakh to 94.53 lakh of shares. July’s nifty rollover stands at 13% on Wednesday. Nifty Put Call Ratio, a sentiment indicator, used by traders to gauge market sentiment and mood, is currently at 0.81 from 1.37 last week, indicating a neutral to positive bias. India VIX, a market volatility indicator often referred to as the fear gauge, is currently trading at 13.20% from 12.27% last week. The implied volatility of ATM Nifty options for the current series is 13.94% versus 12.13% last week, indicating higher volatile movement on either side during the coming session.
The OI distribution of Nifty put options shows that 15,500 have the highest OI concentration, followed by 15,600 and 15,400 which can serve as support for the current expiration and on the call front 15,800, 15 900 and 15,700 experienced significant OI concentration and may act as resistance for the current exhalation.
In weekly options, call writing was observed at 15,700 strike prices followed by 15,800, while on the puts side, notable writing activity was observed at 15,500 and 15,600. strike price. Options data suggests an immediate trading range between 15,500 and 15,800 levels.
Clever OI Concentration
Clever RO change
Shrewd outlook from the bank
In the current series, a Short Build Up has been observed in Bank Nifty Futures with a price drop of -1.47% and an OI increase of 24.58% as of Tuesday; in which there was an addition of 4.56 lakh shares in OI, going from 18.54 lakh to 23.09 lakh shares until Tuesday. Bank Nifty July rollover is 13% until Tuesday. The Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge market sentiment and mood, is currently 0.53 versus 1.03 last week, indicating a neutral to negative bias.
Bank Nifty put OI distribution shows 33,500 have the highest OI concentration, followed by 34,000 that can serve as support for the current expiration and on the call front, 35,000 and 35,500 have experienced significant OI concentration and may act as resistance. In the weekly options, the call selling was seen at 35,000, 34,500 and 34,600 strikes, while on the puts side it was seen at 33,500 and 34,500. The options data indicated an immediate trading range between 34,000 and 35,000 levels.
Nifty Bank OI Concentration
Nifty Bank OI Changes
Nifty 50 trading strategy
Weekly option expiration traders can initiate a market neutral strategy called Long Straddle; in which traders have to buy a lot each of Nifty 15,650 Call at Rs 50 and 15,650 set at Rs 54 options to benefit from a sharp move to either side after a holiday so that gains can be made as the market moves , whatever its direction. The total premium output will be Rs 7,800 (50 + 54 = 104 points) and the break-even point will be 15,754 on the rise and the lower break-even point will be 15,546 while if there is no of movement and Nifty is trading within a range of 104 points, then the maximum loss will be limited to the premium paid of Rs 7,800.
And another strategy that traders can opt to keep a bearish bias will be to buy Nifty at the money 15,600 Put at Rs 36 where the maximum loss will be limited to Rs 2,700 which is the amount of the premium paid and the gains can be unlimited below the breakeven point of 15,564.
(Rajesh Palviya is Vice President of Research (Technical and Derivatives) at Axis Securities Limited. The opinions expressed are those of the author. Please consult your financial advisor before investing.)