By Rajesh Palviya
In the Nifty current series, there has been a Long Build Up witnessed with an increase in price of 0.34% and an increase in OI by 1.10% till Wednesday wherein there was addition of 1.03 lakh shares in OI, increasing from 93.23 lakh to 94.25 lakh shares. Nifty July rollover stands at 6.15% as on Wednesday. Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.25 compared to 1.12 of last week, indicating positive bias.
India VIX, a market volatility indicator often called the fear gauge, is currently trading 12.21% compared to 12.84% of last week. Implied Volatility of Nifty ATM options for the current series is at 12.07% in contrast to 12.29% of last week, indicating low volatile movement on either side in the coming session.
Nifty Put options OI distribution shows that 15,800 has highest OI concentration followed by 15,700 which may act as support for current expiry and on the Call front 16,000 followed by 16,100 & 15,900 witnessed significant OI concentration and may act as resistance for current expiry.
In weekly options there was Call writing seen at 16,000 strike followed by 16,100 while on the Put side noticeable activity of writing was witnessed in 15,800, 15750 & 15,700 strike prices. Options data suggest an immediate trading range between 15,700 and 16,000 levels.
Nifty Open Interest Concentration
Nifty OI Change
Bank Nifty Outlook
In current series there has been a Long Build Up witnessed in Bank Nifty Futures with a decrease in price of 2.47% and increase in OI by 6.73% till Wednesday; wherein there was addition of 1.25 lakh shares in OI, increasing from 18.54 lakh to 19.79 lakh shares till Wednesday.. Bank Nifty July rollover stands at 5.37% as on 7 July 2021. Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.27 compared to 0.75 of last week, indicating positive bias with caution at higher levels.
Bank Nifty Put options OI distribution shows that 35,000 has highest OI concentration followed by 35,500 and 34,000 which may act as support for current expiry and on the Call front 36,000 followed by 36,500 and 37,000 witnessed significant OI concentration and may act as resistance.
In weekly options Call writing seen at 35,900, 36,000 and 36,500 strike while on the put side it was seen at 35,000 and 35,500.Options data indicated an immediate trading range between 35,000 and 36,500 levels.
Banknifty OI Concentration
Banknifty Option OI Change
Nifty strategy for weekly expiry
Traders can trade with LIMITED RISK – UNLIMITED PROFIT STRATEGY by buying an At The Money Call option with strike price of 15900 @ 25 of weekly expiry; wherein this strategy will be profitable if Nifty closes above 15925 on expiry, while the maximum possible loss will be restricted to Rs 1,875 (25 points) which is the premium amount paid by the trader and the gains can be unlimited above the breakeven point of 15925.
The other strategy with Bullish view and reduced premium outflow and lower breakeven point is BULL CALL SPREAD wherein trader will buy one lot of 15850 call strike @ 50 and simultaneously sell one lot of 15950 call strike @ 10, so that net outflow or maximum loss will be restricted to up to Rs 3,000 (40 points). If NIfty on expiry closes above 15890, the strategy will start making profit, however as the risk is limited so is the profit also limited. The maximum gains will be restricted up to Rs 4,500 (60 points) only because the gains of long 15850 strike call will be offset by the sold 15950 strike call, if Nifty closes above 15950 on expiry.
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s own. Please consult your financial advisor before investing.)