The Nifty September series rollover stands at 12% with sentiment indicator Nifty Put Call Ratio (PCR) currently at 1.25, indicating a flat-to-positive movement for expiry.
As for the Bank Nifty which had a weekly expiry on Wednesday, the series witnessed short covering with an increase in price of 3.87% and decrease in OI by 16% where there was shedding of over 4 lakh shares in OI, decreasing from 25.17 lakh to 21.15 lakh shares. The Bank Nifty August series rollover stands at 17%.
Implied Volatility of Nifty ATM options for the current series is at 12.48%, while India Vix is at 11.63% both indicating a slightly higher Volatile movement on either side in expiry session compared to last weekly expiry, analyst Rajesh Palviya, Senior Vice President, Technical and Derivatives Research at Axis Securities said.
Palviya said that the Nifty Put options OI distribution shows that 20,000 has highest OI concentration followed by 19,900 and 19,800 which may act as support for today’s expiry and on the Call front 20,100 followed by 20,200 and 20,300 witnessed significant OI concentration and may act as resistance. There was significant Call writing seen at 20,200 and 20,150 indicating resistance, he added.
On the put side it was at 20,000 and 19,900 strike which could act as a support today with the options data suggesting an immediate trading range between 19,900 and 20,200 levels, the Axis Securities analyst said.
Meanwhile, Bank Nifty Put options OI distribution data shows that 45,500 has highest OI concentration followed by 45,000 and 44,500 which may act as support for current expiry and on the Call front 47,000 followed by 46,500 has witnessed significant OI concentration and may act as resistance, Palviya informed. Options data for this weekly expiry indicated an immediate trading range between 45,000 and 47,000 levels with 46,000 acting as pivotal levels, he said further.On the sectoral front this week, banking and telecom led the pack with gains of 3% and 2%, respectively followed by finance and power. Stocks which saw significant price action along with increase in OI include Tata Motors, Larsen & Toubro,Titan and Bharti Airtel.
Options Strategy: Nifty, Bank Nifty
Analyst Rajesh Palviya, Senior Vice President, Technical and Derivatives Research at Axis Securities recommended traders in Nifty to initiate a moderately bullish strategy with reduced premium outflow and lower breakeven point called ‘Bull Call Spread’ of September 21 weekly Expiry where trader can buy one lot of 20,100 call strike at Rs 121 and simultaneously sell one lot of 20,300 call strike at 43, so that net outflow or maximum loss is restricted to up to Rs 3,900.
“He said that if NIFTY closes above 20,178 on expiry the strategy will start making profit, however as the risk is limited so will be the profit. The maximum gains will be restricted up to Rs 6,100 only because the gains of long 20,100 strike call will be offset by the sold 20,300 strike call if Nifty closes above 20,300 on expiry,” Palviya said.
As for Bank Nifty, traders can initiate a similar strategy called the ‘Bull Call Spread’ of September 20 weekly expiry where trader will buy one lot of 46,000 call strike at Rs 263 and simultaneously sell one lot of Rs 46,500 call strike at Rs 98, so that net outflow or maximum loss is restricted to up to Rs 2,475.
“If Bank Nifty on expiry day closes above 46,165 the strategy will start making profit. However, as the risk is limited the profit potential is also limited. The maximum gains will be restricted up to Rs 5,025 only, because the gains of a long 46,000 strike call will be offset by the sold 46,500 strike call if Bank Nifty closes above 46,500 on expiry,” Palviya said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
