Options data suggest an immediate trading range for Nifty 50 index between 16,400 and 16,100 levels on weekly F&O expiry day.
By Rajesh Palviya
In the current Nifty series, there has been a Long Addition witnessed with an increase in price of 3.02% and increase in OI by 39% as on Wednesday wherein there was addition of 41.19 lakh shares in OI, increasing from 88.24 lakh to 136.43 lakh shares. Nifty August rollover stands at 10.41% as of Wednesday.
Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.23 compared to 1.22 of last week, indicating positive bias. India VIX, a market volatility indicator often called the fear gauge, is currently trading 12.73% compared to 12.87% last week. Implied Volatility of Nifty ATM options for the current series is at 12.45% in contrast to 13.74% of last week, indicating marginal volatile movement on either side in the coming session.
Nifty Put options OI distribution shows that 16,200 has the highest OI concentration followed by 16,100 & 16,000 which may act as support for current expiry and on the Call front 16,300 followed by 16,400 & 16,500 witnessed significant OI concentration and may act as resistance for the current expiry. In weekly options there was Call writing seen at 16,400 strike followed by 16,300 & 16,500 while on the Put side noticeable activity of writing was witnessed in 16,100 & 16,200 strike prices. Options data suggest an immediate trading range between 16,400 and 16,100 levels.
Nifty OI Concentration
Nifty OI Change
Bank Nifty Outlook
In the current series there has been a Long Build Up witnessed in Bank Nifty Fut with a increase in price of 3.11% and increase in OI by 4.39% as on Wednesday wherein there was addition of 1.76 lakh shares in OI, increasing from 19.61 lakh to 20.47 lakh shares. Bank Nifty August rollover stands at 6.88% as on Wednesday. Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.73 compared to 0.98 of last week indicating positive bias.
Bank Nifty Put options OI distribution shows that 35,500 has highest OI concentration followed by 35,000 which may act as support for current expiry and on the Call front 36,000 followed by 36,500 & 37,000 witnessed significant OI concentration and may act as resistance. In weekly options Call writing seen at 36,000,36,200 & 37,000 strike while on the put side it was seen at 35,500 & 35,000.Options data indicated an immediate trading range between 35,000 and 36,500 levels.
Banknifty OI Concentration
Banknifty OI Change
Nifty 50 trading strategy for F&O expiry day
Traders can initiate a Moderately Bullish strategy with reduced premium outflow & lower breakeven point called BULL CALL SPREAD of 12th August Expiry wherein trader will buy one lot of 16,250 call strike @ 57.05 and simultaneously sell one lot of 16,350 call strike @ 15.25, so that net outflow or maximum loss will be restricted to upto Rs 2,090 (42 points). On expiry day, if Nifty closes above 16,292 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 2,910 (58 points) only because the gains of long 16,250 strike call will be offset by the sold 16,350 strike call if Nifty closes above 16,292 on expiry.
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s own. Please consult your financial advisor before investing.)