F&O expiry: Nifty to trade in 17900-18300 range, Bank Nifty may hit 39000; check trading strategy

October 14, 2021 8:58 AM

For F&O expiry day, options data suggest an immediate trading range between 18,300 and 17,900 levels for Nifty

Nifty, bank nifty, stock marketBank Nifty Put options OI distribution shows that 38,000 has highest OI concentration followed by 37,500 & 38,500 which may act as support

By Rajesh Palviya

In Nifty current series, there has been a Long Addition witnessed with an increase in the price of 3.12% and increase in OI by 13.61% as of Wednesday wherein there was addition of 16.62 lakh shares in OI, increasing from 116.52 lakh to 138.69 lakh shares. Nifty October rollover stands at 9.91% and Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.49 compared to 1.29 of last week, indicating positive bias with caution at higher levels.

India VIX, a market volatility indicator, often called the fear gauge, is currently trading 16.10% compared to 16.16% last week. Implied Volatility of Nifty ATM options for the current series is at 15.40% in contrast to 14.52% of last week, indicating low volatile movement on either side in the coming session.

Nifty Put options OI distribution shows that 18,000 has highest OI concentration followed by 17,900 & 17,800 which may act as support for current expiry and on the Call front 18,200 followed by 18,300 witnessed significant OI concentration and may act as resistance for current expiry.

In weekly options, there was Call writing seen at 18,200 strike followed by 18,300 & 18,400 while on the Put side noticeable activity of writing was witnessed in 18,000 & 17,900 strike prices. Options data suggest an immediate trading range between 18,300 and 17,900 levels.

Nifty Open Interest Concentration

Nifty Open Interest Change 

Bank Nifty outlook

In current series there has been a Short Covering witnessed in Bank Nifty Fut with a increase in price of 2.92% and decrease in OI by -20.62% as on Wednesday wherein there was unwinding of 4.32 lakh shares in OI, decreasing from 20.95 lakh to 16.63 lakh shares. Bank Nifty October rollover stands at 8.69%, while Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.07 compared to 0.91 last week, indicating caution at higher levels.

Bank Nifty Put options OI distribution shows that 38,000 has highest OI concentration followed by 37,500 & 38,500 which may act as support for current expiry and on the Call front 39,500 followed by 38,500 & 38,800 witnessed significant OI concentration and may act as resistance.

In weekly options Call writing seen at 38,000,38,500 & 38,700 strike while on the put side it was seen at 38,000 & 37,500 Options data indicated an immediate trading range between 38,000 and 39,000 levels.

Bank Nifty Open Interest Concentration

Bank Nifty Open Interest Change 

Nifty 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 for 14th October expiry wherein trader will buy one lot of 18,150 call strike @ 63 and simultaneously sell one lot of 18,300 call strike @ 9, so that net outflow or maximum loss will be restricted to up to Rs 2,700. If Nifty on expiry day closes above 18,204, 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 4,800 only because the gains of long 18,150 strike call will be offset by the sold 18,300 strike call if Nifty closes above 18,300 on expiry.

(Rajesh Palviya, VP– Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)

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