By Rajesh Palviya
In the Nifty current series, a Short Covering has been witnessed with increase in price of 4.09% and decrease in OI by (-4.03%) as of Wednesday, wherein there was unwinding of 3.87 lakh shares in OI, decreasing from 96.04 lakh to 92.18 lakh shares. Nifty current month rollover stands at 14.93% 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 1.48 of last week, indicating low volatile to flat session.
India VIX, a market volatility indicator often called the fear gauge, is currently trading 17.82% compared to 16.70% of last week. Implied Volatility of Nifty ATM options for the current series is at 16.34% in contrast to 15.32% of last week, indicating low volatile movement on both the sides in the expiry session.
Nifty Put options OI distribution shows that 17,900 has highest OI concentration followed by 17,800 & 17,700 which may act as support for current expiry and on the Call front 18,100 followed by 18,200 & 18,000 witnessed significant OI concentration and may act as resistance for current expiry.
In weekly options there was Call writing seen at 18,100 strike followed by 18,000 & 18,200 while on the Put side noticeable activity of writing was witnessed in 17,800 & 17,700 strike prices. Options data suggest an immediate trading range between 18,200 and 17,700 levels.
Nifty Open Interest Concentration
Nifty OI Change
Bank Nifty Outlook
In current series of Bank Nifty, a Short Covering has been witnessed in Bank Nifty Fut with a increase in price of 8.33% and decrease in OI by (-13.70%) as of Wednesday, wherein there was unwinding of 3.14 lakh shares in OI, decreasing from 22.89 lakh to 19.75 lakh shares. Bank Nifty current series rollover stands at 11.62%, while Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.72 compared to 0.85 of last week indicating flat-to-positive bias.
Bank Nifty Put options OI distribution shows that 38,000 has highest OI concentration followed by 37,000 & 37,500 which may act as support for current expiry and on the Call front 38,500 followed by 39,000 witnessed significant OI concentration and may act as resistance.
In weekly options Call writing seen at 38,200, 38,500 & 39,000 strike while on the put side it was seen at 37,800, 37,500 & 37,000. Options data indicated an immediate trading range between 38,500 and 37,000 levels.
Bank Nifty Open Interest Concentration
Bank Nifty OI Change
Nifty 50 trading strategy on weekly F&O expiry day
Traders can initiate a Moderately Bearish strategy with reduced premium outflow & lower breakeven point called Debit Put Spread or Bear Put Spread for 20th January Expiry wherein trader will buy one lot of 18,000 Put strike @ 83 and simultaneously sell one lot of 17,800 Put strike @ 15, so that net outflow or maximum loss will be restricted to up to Rs 3,400. If Nifty on expiry closes below 17,932 the strategy will start making profit, however, as there is one out of the money sold put which has helped to bring down the cost of Long Put and converted the strategy into limited risk & profits. The maximum gains will be restricted up to Rs 6,600 because the gains of long 18,000 strike Put will be offset by the sold 17,800 strike Put if Nifty closes below 17,800 on expiry.
(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)