Options data suggest an immediate trading range for Nifty 50 index between 15,800 and 15,500 levels.
By Rajesh Palviya
In the Nifty current series, there has been a Long Unwinding witnessed with decrease in price of -0.78% and decrease in OI by -52% as on today wherein there was shedding of 48.19 lakh shares in OI, decreasing from 93.23 lakh to 45.04 lakh shares (the reason for shedding in OI is due to monthly expiry tomorrow). Nifty March rollover stands at 58% as on today. Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.93 compared to 1.18 of last week, indicating neutral-to-positive trend .
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India VIX, a market volatility indicator often called the fear gauge, is currently trading 13.69% compared to 11.89% of last week. Implied Volatility of Nifty ATM options for the current series is at 13.57% in contrast to 12.01% of last week, indicating volatile movement on either side in coming session.
Nifty Put options OI distribution shows that 15,500 has highest OI concentration followed by 15,600 & 15,700 which may act as support for current expiry and on the Call front 15,800 followed by 15,900 & 16,000 witnessed significant OI concentration and may act as resistance for current expiry.
In weekly options, there was Call writing seen at 15,800 strike followed by 15,700 & 15,900 while on the Put side noticeable activity of writing was witnessed in 15,600 & 15,500 strike prices. Options data suggest an immediate trading range between 15,800 and 15,500 levels.
Nifty Open Interest Concentration
Nifty Option OI Change
Bank Nifty Outlook
In current series there has been a Long Unwinding witnessed in Bank Nifty Fut with a decrease in price of -1.26% and decrease in OI by -55.26% as on today wherein there was unwinding of 10.24 lakh shares in OI, decreasing from 18.54 lakh to 8.29 lakh shares as of Wednesday. Bank Nifty July rollover stands at 65.29% as on Wednesday. Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.67 compared to 0.70 of last week indicating neutral-to-positive trend.
Bank Nifty Put options OI distribution shows that 34,000 has highest OI concentration followed by 34,500 & 33,500 which may act as support for current expiry and on the Call front 34,500 followed by 35,000 & 35,500 witnessed significant OI concentration and may act as resistance; while 34,500 is likely to act as pivotal level.
In weekly options Call writing seen at 34,500,35,200 & 34,600 strike while on the put side it was seen at 33,500 & 33,000.Options data indicated an immediate trading range between 34,500 , 34,100 and 34,000 levels.
Bank Nifty OI Concentration
BankNifty Option OI Change
Nifty 50 trading strategy for expiry
Traders can initiate a Moderately Bullish strategy with reduced premium outflow & lower breakeven point called BULL CALL SPREAD of 29th July expiry wherein trader will buy one lot of 15,700 call strike @ 51 and simultaneously sell one lot of 15,800 call strike @ 15, so that net outflow or maximum loss will be restricted to upto Rs 1,800 (36 points). If Nifty on expiry closes above 15,736, 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 3,200 (64 points) only because the gains of a long 15,700 strike call will be offset by selling 15,800 strike call if Nifty closes above 15,800 on expiry.
And for traders who want to trade for unlimited profit with limited cash outflow can Buy Nifty strike price of 15,700 @ 51 of 29th July expiry; wherein this strategy will be profitable if Nifty closes above 15,751 on expiry, while the maximum possible loss will be restricted to Rs 2,550 (51 points) which is the premium amount paid by the trader & the gains can be unlimited above the breakeven point of 15,751.
(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.)