Nifty support at 15800, Bank Nifty to trade flat-to-negative today; use Put Ladder for 21 July F&O expiry

Nifty Put options OI distribution shows that 15,800 has highest OI concentration followed by 15,600 & 15,700 which may act as support for current expiry

Nifty support at 15800, Bank Nifty to trade flat-to-negative today; use Put Ladder for 21 July F&O expiry
The strategy which we are suggesting for the weekly expiry scheduled on 21st July is a bearish strategy

By Rajesh Palviya

In Nifty current series there has been a Long Build Up witnessed with increase in price of 1.50% and increase in OI by  5%  as of Wednesday wherein there was addition of 5.18 lakh shares in OI, increasing from 112.89 lakh to 118.07 lakh shares. Nifty current month rollover stands at 15% as of Wednesday, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.78 compared to 1.27 of last week, indicating a flat-to-negative movement for expiry.

India VIX, a market volatility indicator often called the fear gauge, is currently trading 18.52% compared to 19.20% of last week. Implied Volatility of Nifty ATM options for the current series is at 18.65% in contrast to 19.06% of last week, indicating low volatile movement on either side in the expiry session.

Nifty Put options OI distribution shows that 15,800 has highest OI concentration followed by 15,600 & 15,700 which may act as support for current expiry and on the Call front 16,100 followed by 16,200 & 16,300 witnessed significant OI concentration and may act as resistance for current expiry. Options data suggest an immediate trading range between 15,800 and 16,200 levels.

In Nifty Call writing was witnessed at 16,000 , 16,100 & 16,300 ;while on Put side it was seen at 15,800 ,15,600 &15,500.

Nifty Open Interest Concentration

Nifty Option OI change

Bank Nifty Outlook

In current series there has been a Short Covering witnessed in Bank Nifty Fut with an increase in price of 4.57% and decrease in OI by 8% as of Wednesday, wherein there was unwinding of 1.78 lakh shares in OI, decreasing from 22.34 lakh to 20.56 lakh shares. Bank Nifty Current series rollover stands at 16% as of Wednesday, while Bank Nifty Put Call Ratio is currently at 0.74 compared to 1.13 of last week indicating flat-to-negative movement for expiry.

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 35,300 followed by 35,500 & 35,800 witnessed significant OI concentration and may act as résistance. Options data indicated an immediate trading range between 34,000 and 35,500 levels.

On a weekly basis significant Call writing in Bank Nifty was seen at 35,000 ,35,200 & 35,300 strike while on put side it was seen at  34,000, 34,500 & 34,400.

Bank Nifty Open Interest Concentration

Bank Nifty Option OI Change

NSE Nifty 50 trading strategy for 21 July weekly F&O expiry

The strategy which we are suggesting for the weekly expiry scheduled on 21st July is a bearish strategy namely PUT LADDER, which involves buying of one lot of Nifty 16,000 PUT @ 187 & selling of one lot each of 15,800 PUT @ 106 & one lot of 15,600 PUT @ 57. The maximum profit of Rs 8,800 will be attained at 15,800 levels, while strategy will start making loss below 15,400. The cost of the strategy involves outflow is Rs 1,200, which is the maximum loss if Nifty closes & remains above 15,976 levels on expiry, however any sharper movement on lower side could result in losses and, as an extra put has been sold it’s advisable to exit the strategy in total to avoid unlimited losses below 15,400. Break Even points of the strategy are 15,976 on upside, and 15,376 on the lower side.

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

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