Nifty support at 15800 today, be cautious in Bank Nifty; use Call Ladder in Nifty for gains on next F&O expiry

Nifty support at 15800 today, be cautious in Bank Nifty; use Call Ladder in Nifty for gains on next F&O expiry

By Rajesh Palviya

In Nifty current series there has been a Long addition witnessed with increase in price of 1.56% and increase in OI by 11% as of Wednesday wherein there was addition of 11.95 lakh shares in OI, increasing from 112.81 lakh to 124.84 lakh shares. Nifty current month rollover stands at 13% as of Wednesday, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 1.27 compared to 1.03 of last week, indicating positive movement for expiry.

Nifty Put options OI distribution shows that 15,800 has highest OI concentration followed by 15,900 and 15,700 which may act as support for current expiry and on the Call front 16,200 followed by 16,300 & 16,100 witnessed significant OI concentration and may act as resistance for current expiry. Options data suggest an immediate trading range between 15,800 and 16,200 levels with 16000 acting as pivotal levels.

In Nifty Call writing was witnessed at 16,200 , 16,100 and 16,300; while on Put side it was seen at 15,900,15,700 and 15,800

Nifty Open Interest concentration 

Nifty Option OI Change

Bank Nifty Outlook 

In the current series there has been a Long addition witnessed in Bank Nifty Fut with an increase in price of 2.91% and increase in OI by 16% as of Wednesday wherein there was addition of 3.66 lakh shares in OI, increasing from 22.34 lakh to 26 lakh shares. Bank Nifty Current series rollover stands at 11%, while Bank Nifty Put Call Ratio is currently at 1.38 compared to 0.86 of last week indicating positive movement for expiry with caution at higher levels.

Bank Nifty Put options OI distribution shows that 34,000 has highest OI concentration followed by 33,500 & 33,000 which may act as support for current expiry and on the Call front 34,500 followed by 35,000 & 35,500 witnessed significant OI concentration and may act as résistance. Options data indicated an immediate trading range between 33,800 and 34,800 levels.

On a weekly basis significant Call writing in Bank Nifty was seen at 35,000, 34,500 & 35,500 strike while on put side it was seen at 34,000, 33,500 & 33,800.

Bank Nifty Open Interest Concentration

Bank Nifty Option OI Change

NSE Nifty 50 trading strategy for 14 July F&O expiry

The strategy which we are suggesting for this weekly expiry dated 14th July is a Moderately Bullish strategy called as CALL LADDER, which involves buying of one lot of Nifty 16,000 Call @ 178 & selling of one lot each of 16,200 Call @94 and one lot of 16,400 Call @ 39. The cost of the strategy involves outflow of Rs 2,250 which is the maximum loss if Nifty trades and remains below 16,050 levels on expiry .The maximum profit of Rs 7,750 will be attained above 16,200 levels, while strategy will start making losses if Nifty crosses 16,550 hence, it’s advisable to exit the strategy in total to avoid unlimited losses above 16,550. Break Even points of the strategy are 16,045 on upside & 16,555 on the lower side.

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