By Rajesh Palviya
In the Nifty present series, there has been a Short Covering witnessed with an enhance in the value of 5.23% and reduce in OI by 47% as of today wherein there was the unwinding of 41.26 lakh shares in OI, decreasing from 88.24 lakh to 46.98 lakh shares, whilst OI in September series is 95.35 lakh shares with the addition of 36.88 lakh shares on Wednesday. The significant unwinding in the present series is due to the month-to-month expiry scheduled for Thursday. Nifty August rollover stands at 68.16% as of Wednesday.
Nifty Put Call Ratio, a sentiment indicator employed by traders to gauge the marketplace sentiment and mood, is at the moment at 1.27 compared to 1.49 of last week, India VIX, a marketplace volatility indicator typically known as worry gauge, is at the moment trading at 13.50 per cent compared to 12.90 per cent last week. Implied Volatility of Nifty ATM selections for the present series is at 12.49% in contrast to 12.40% last week, indicating marginal volatile movement on either side in the coming session.
Nifty Put selections OI distribution shows that 16,500 has highest OI concentration followed by 16,600 & 16,400 which may possibly act as assistance for present expiry and on the Call front 16,700 followed by 16,800 & 16,900 witnessed substantial OI concentration and may possibly act as resistance for present expiry. In weekly selections there was Call writing seen at 16,800 strike followed by 16,700 & 16,750 whilst on the Put side noticeable activity of writing was witnessed in 16,600 & 16,500 strike rates. Options information recommend an quick trading variety involving 16,800 and 16,400 levels.
Nifty Open Interest Concentration
Nifty Option OI change
Bank Nifty Outlook
In the present series, there has been a Short Covering witnessed in Bank Nifty Fut with an enhance in the value of 2.25% and reduce in OI by -59.75% as of today wherein there was the unwinding of 11.72 lakh shares in OI, decreasing from 19.61 lakh to 7.89 lakh shares, whilst in September series OI was 11.86 lakh shares with addition of 3.59 lakh shares on Wednesday. Bank Nifty August rollover stands at 61.08% as on Wednesday. Bank Nifty Put Call Ratio, a sentiment indicator employed by traders to gauge the marketplace sentiment and mood, is at the moment at .95 compared to .74 of last week indicating positive bias with caution.
Bank Nifty Put selections OI distribution shows that 36,000 has highest OI concentration followed by 36,500 which may possibly act as assistance for present expiry and on the Call front 35,000 followed by 35,500 & 34,500 witnessed substantial OI concentration and may possibly act as resistance. In weekly selections Call writing seen at 35,800, 35,900 & 36,000 strike whilst on the place side it was seen at 35,500 & 35,000.Options information indicated an quick trading variety involving 35,000 and 36,500 levels.
Bank Nifty Open Interest Concentration
Bank Nifty Option OI Change
Nifty trading tactic for F&O expiry day
The higher open interest concentration in Nifty on 26th August expiry is at 16,700 Call & 16,500 Put along with decreasing IVs is indicating narrow movement on Thursday and to take benefit of the similar we are suggesting a tactic known as Brief STRADDLE. This tactic requires promoting of (ATM) Contact & Place one lot each and every of 16,650 strike getting premium of 32 & 52 respectively garnering in total inflow of Rs 4,200 (84 points).As it is a credit spread from profit viewpoint this tactic will produce maximum profit of Rs 4,200 restricted to total premium received if Nifty closes precisely at the sold strike i.e 16,650 on expiry even so, in case if Nifty breaches the upper breakeven level of 16,734 or the reduce breakeven level of 16,566 and sustains on either side then the loss can be practically limitless and therefore it is advisable to preserve a combine premium (i.e add premium of contact + place collectively) cease loss of 140-150 points so that if due to any cause if there is any sustain wide movement in Nifty the exposure of limitless loss can be curtailed.
The tactic will produce earnings if Nifty remains in the variety of 16,730 to 16,570 till the expiry and also closes involving the similar, as the THETA or TIME DECAY of selections will work doubly in our favour ultimately generating it a most effective-case situation as we attain closer to expiry on each and every passing hour.
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s personal. Please seek advice from your economic advisor ahead of investing.)