By Rajesh Palviya
In Nifty current series there has been a Short Covering witnessed with increase in price of 6.37% and decrease in OI by 48% as on today wherein there was unwinding of 59 Lac shares in OI, decreasing from 123.97 lac to 64.89Lac shares there was addition of 25.74 Lac shares in OI in next series, the significant OI decrease is due to monthly expiry scheduled tomorrow while today Nifty September rollover stands at 58% as on today and Nifty Put Call Ratio a sentiment indicator used by Traders to gauge the market sentiment and mood is currently at 0.94 compared to 1.46 of last week, indicating positive bias.
India Vix a market volatility indicator often called the “fear gauge“ is currently trading 18.84% compared to 16.60% of last week. Implied Volatility of Nifty ATM options for the current series is at 17.44% in contrast to 16.35% of last week, indicating volatile movement on either side in coming session.
Nifty Put options OI distribution shows that 17,600 has highest OI concentration followed by 17,500 & 17,700 which may act as support for current expiry and on the Call front 17,900 followed by 17,800 witnessed significant OI concentration and may act as resistance for current expiry.
In WEEKLY options there was Call writing seen at 17,900 strike followed by 17,800 & 17,700 while on the Put side noticeable activity of writing was witnessed in 17,600 & 17,650 strike prices. Options data suggest an immediate trading range between 17,900 and 17,500 levels.
Banknifty Outlook :
In current series there has been a Short Covering witnessed in Bank Nifty Fut with a increase in price of 5.99% and decrease in OI by 47% as on today wherein there was unwinding of 6.86Lac shares in OI, decreasing from 14.63Lac to 7.07Lac shares while there was addition of 6.71 Lac shares today in next series. Bank Nifty September rollover stands at 66% for today and Bank Nifty Put Call Ratio a sentiment indicator used by Traders to gauge the market sentiment and mood is currently at 0.88 compared to 1.09 of last week indicating positive bias. .
Bank Nifty Put options OI distribution shows that 37,500 has highest OI concentration followed by 37,000 & 36,000 which may act as support for current expiry and on the Call front 38,000 followed by 38,200 & 38,300 witnessed significant OI concentration and may act as resistance.
In WEEKLY options Call writing seen at 37,900,38,000 & 38,100 strike while on the put side it was seen at 37,000 & 37,500 & 36,000 Options data indicated an immediate trading range between 38,500 and 37,000 levels.
Banknifty Open Interest Concentration :
Banknifty Option Open interest change :
Nifty Strategy :
Traders can initiate a Moderately Bullish strategy with reduced premium outflow & lower breakeven point called BULL CALL SPREAD for tomorrow’s Expiry wherein trader will buy one lot of 17,700 call strike @ 68 and simultaneously sell one lot of 17,850 call strike @ 18, so that net outflow or maximum loss will be restricted to upto Rs 2,500 (50 points).Nifty on expiry if closes above 17,750 the strategy will start making profit, however as the risk is limited so is the profit also limited. The maximum gains will be restricted up to Rs 5,000 (100 POINTS) only because the gains of a long 17,700 strike call will be offset by the sold 17,850 strike call if Nifty closes above 17,850 on expiry.
And for Traders who want to trade for unlimited profit with limited cash outflow can Buy Nifty strike price of 17,750 @ 45 of 30th September expiry; wherein this strategy will be profitable if Nifty closes above 17,795 on expiry, while the maximum possible loss will be restricted to Rs 2,250/- (45 points) which is the premium amount paid by the trader & the gains can be unlimited above the bep of 17,795.
(Rajesh Palviya is the Vice President – Research ( Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)