Nifty support at 16200, Bank Nifty may remain flat-to-negative today; use Call Ladder for 28 July F&O expiry

Nifty support at 16200, Bank Nifty may remain flat-to-negative today; use Call Ladder for 28 July F&O expiry

By Rajesh Palviya

In Nifty current series there has been a Short Covering witnessed with increase in price of 4.92% and decrease in OI by 17% as of Wednesday wherein there was unwinding of 18.89 lakh shares in OI, decreasing from 112.89 lakh to 94 lakh shares. Nifty current month rollover stands at 24% as of Wednesday, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.40 compared to 1.09 of last week, indicating a flat-to-cautious movement for expiry.

Implied Volatility of Nifty ATM options for the current series is at 16.87% in contrast to 17.71% of last week, indicating low-to-narrow movement on either side in expiry session.

Nifty Put options OI distribution shows that 16,200 has highest OI concentration followed by 16,300 & 16,400 which may act as support for current expiry and on the Call front 16,600 followed by 16,700 & 16,800 witnessed significant OI concentration and may act as resistance for current expiry. Options data suggest an immediate trading range between 16,650 and 16,350 levels and 16,500 acting as pivotal levels.

In Nifty Call writing was witnessed at 16,800, 16,700 & 16,600 ;while on Put side it was seen at 16,200 ,16,500 &16,400.

Nifty Open Interest Concentration

Nifty Option OI Change

Bank Nifty Outlook

In current series there has been a Short Covering witnessed in Bank Nifty Fut with an increase in price of 7.69% and decrease in OI by 9% as of Wednesday, wherein there was unwinding of 1.91 lakh shares in OI, decreasing from 22.34 lakh to 20.42 lakh shares. Bank Nifty Current series rollover stands at 21% as of Wednesday, while Bank Nifty Put Call Ratio is currently at 1.13 compared to 0.85 of last week indicating flat-to-negative movement for expiry.

Bank Nifty Put options OI distribution shows that 35,000 has highest OI concentration followed by 35,500 & 35,200 which may act as support for current expiry and on the Call front 36,000 followed by 36,500 & 36,200 witnessed significant OI concentration and may act as résistance. Options data indicated an immediate trading range between 36,300 and 35,500 levels and 36,000 acting as pivotal levels.

On a weekly basis Significant Call writing in Bank Nifty was seen at 36,000 ,36,200 & 36,500 strike while on put side it was seen at 35,000, 35,500 & 35,200.

Bank Nifty Open Interest Concentration

Bank Nifty Option OI Change

NSE Nifty 50 trading strategy for 28 July F&O expiry

The strategy which we are suggesting for this weekly expiry dated 28th July is a Moderately Bullish strategy called as CALL LADDER, which involves buying of one lot of Nifty 16,500 Call @ 153 & selling of one lot each of 16,650 Call @ 81 & one lot of 16,800 Call @ 37. The cost of the strategy involves outflow of Rs 1,750 which is the maximum loss if Nifty trades, and remains below 16,535 levels on expiry. The maximum profit of Rs 5,750 will be attained above 16,650 levels, while strategy will start making loss if Nifty crosses 16,900, hence it’s advisable to exit the strategy in total to avoid Unlimited losses above 16,900. Break Even points of the strategy are 16,535 on upside & 16,915 on the lower side.

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