Nifty support at 18300, use Iron Butterfly for 24 Nov F&O expiry for gains; Bank Nifty resistance at 42500 | The Financial Express

Nifty support at 18300, use Iron Butterfly for 24 Nov F&O expiry for gains; Bank Nifty resistance at 42500

Nifty Put options OI distribution shows that 18,300 has highest OI concentration followed by 18,200 & 18,100 which may act as support for current expiry

Nifty support at 18300, use Iron Butterfly for 24 Nov F&O expiry for gains; Bank Nifty resistance at 42500
The strategy which we are suggesting for the week with expiry schedule on 24th November 2022 is IRON BUTTERFLY

By Rajesh Palviya

In the Nifty current series there has been a Long Addition witnessed with increase in price of 3.73% and increase in OI by  6% as of Wednesday wherein there was addition of 6.05 lakh shares in OI, increasing from 109.35 lakh to 115.41 lakh shares. Nifty current month rollover stands at 18% as of Wednesday, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.14 compared to 1.26 of last week, indicating a flat-to-positive movement for expiry.

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India Vix, a market volatility indicator often called the fear gauge, is currently trading 15.10% compared to 15.57% of last week. Implied Volatility of Nifty ATM options for the current series is at 13.54% in contrast to 14.42% of last week, indicating lower volatile movement on either side in the expiry session compared to last week.

Nifty Put options OI distribution shows that 18,300 has highest OI concentration followed by 18,200 & 18,100 which may act as support for current expiry and on the Call front 18,400 followed by 18,500 & 18,600 witnessed significant OI concentration and may act as resistance for current expiry. Options data suggest an immediate trading range between 18,600 and 18,200 levels. In Nifty Call writing was witnessed at 18,500, 18,600 & 18,400; while on Put side it was seen at 18,300, 18,200 & 18,400.

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Nifty Open Interest Concentration

Nifty Option OI Change

Bank Nifty Outlook

In the current series there has been a Long addition witnessed in Bank Nifty Fut with an increase in price of 2.64% and increase in OI by 57% as of Wednesday, wherein there was addition of 9.52 lakh shares in OI, increasing from 16.71 lakh to 26.24 lakh shares. Bank Nifty Current series rollover stands at 17% as of Wednesday, while Bank Nifty Put Call Ratio is currently at 1.40 compared to 1.06 of last week indicating flat-to-mix movement for expiry.

Bank Nifty Put options OI distribution shows that 42,500 has highest OI concentration followed by 42,200 & 42,000 which may act as support for current expiry and on the Call front 42,500 followed by 42,700 & 43,000 witnessed significant OI concentration and may act as résistance. Options data indicated an immediate trading range between 42,000 and 43,000 levels with 42,500 acting as pivotal level.

On a weekly basis Significant Call writing in Bank Nifty was seen at 42,500, 42,700 & 43,000 strike while on put side it was seen at  42,500, 42,300 & 42,000.

Bank Nifty Option Open Interest Concentration

Bank Nifty Option OI Change

NSE Nifty 50 trading strategy for 24 Nov weekly F&O expiry

The strategy which we are suggesting for the week with expiry schedule on 24th November 2022 is IRON BUTTERFLY, which involves Selling of one lot of Nifty 18,450Call @ 138 & Selling of one lot of Nifty 18,450 Put @ 136 and simultaneously buying one lot of 18,800 Call @ 18 & buying one lot of 18,100 put @ 40. Both risk and reward in this strategy are limited and the gains in the strategy will be accrued between two levels i.e 18,650 on upside & 18,250 on downside. Maximum profit of Rs 10,800 will happen if Nifty closes/expires at 18,450.On the other hand if Nifty on expiry closes above 18,666 (upper bep) or below 18,234 (lower bep) then strategy will start making loss; while any close above 18,800 or below 18,100 then the max loss will be restricted to Rs 6,700. 

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

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First published on: 17-11-2022 at 10:50 IST