Options Data Indicates Wider Trading Range

The resistance level has increased by 1,000 points at 18,000 CE and the support level has decreased by 600 points at 17,000 PE, leaving more room for broad-spectrum trading for the week ahead. Derivatives analysts believe that NSE Nifty is in the consolidation phase, so there may no longer be a continued upward trajectory.

The 18,000CE has the highest Call OI followed by 17,500/17,600/18,100/17,900/17,400/17,800 hits, while 17,600/17,500/18,000/18,100/18,200/17,800 keystrokes recorded a strong accumulation of Call OI.

On the Put side, the maximum Put OI is seen at 17,000 PE followed by 16,500/17,200/17,300/17,100/16,000 strikes. And 17,200/17,100/16,800/16,500/16,000 keystrokes saw a reasonable addition of Put OI.

In the options space, Nifty recorded continued Put writing to ATM and OTM strikes. According to NSE data, at 17400 strike, Put holding the main open interest. Callers continue to remain under pressure, while the high call base remained at the 17500 strike. The close of these options is likely to take the Nifty towards 17800. On the other hand, it may remain positive with a stop loss near the 17200 level.

Dhirender Singh Bisht, Senior Research Analyst (Derivatives) at SMC Global Securities Ltd, said: “In Nifty, the highest open interest is at 17,500 strikes, while on the Put side, Call OI is at 17,000 strikes. On the daily chart, Nifty and the Bank Nifty oscillators are heading towards the overbought zone.”

Open interest in nifty futures remained low at nearly a crore of shares. A marginal close in long positions was seen as the Nifty approached the 17,500 level, but no major short additions were seen. Additionally, as most of the index heavyweights have already announced their results, the focus may shift to the mid-cap space in the coming sessions.

“On Friday, RBI announced another hike in policy rates, which had already been discounted in the market. On the weekly chart, Nifty and Bank Nifty closed green. Nifty is trading above the 17,000 psychological level as Bank Nifty is hovering around 38,000,” Bisht added. For the week ended August 5, 2022, BSE Sensex closed at 58,387.93 points, a recovery of 817.68 points or 1.42%, from the previous week’s close of 57,570.25 points. Recording a continued rebound of 239.25 points or 1.39%, NSE Nifty ended the week at 17,397.50 points from 17,158.25 points a week ago. Bisht predicts: “During the next session, Nifty is likely to trade in the area of ​​1720017700 levels, while Bank Nifty may trade in the area of ​​37500-38500 levels. Downside buy strategies can be followed this week, as August playoff turnover is positive.”

The India VIX volatility index fell 1.78% to 18.92. Shutting down callers and escalating geopolitical tensions can be attributed to the rise in implied volatility (IV) over the past week. However, the volatility has stabilized and may not break above the 20 level in the coming sessions.

“Implied call volatility closed at 17.09%, while put options closed at 18.70%. The Nifty VIX for the week closed at 19.26%. The OI’s PCR for the week closed at 1.37,” Bisht noted.

FIIs in the F&O space sold off slightly last week as they trimmed their long positions due to geopolitical issues. However, FII remained net in both index and equity futures. FIIs sold index futures worth almost Rs1,200 crore and bought Rs580-cr equity futures. Net positions in equity futures were virtually unchanged over the week, according to ICICIdirect.com.

Clever bank

The NSE banking index closed the week at 37,920.60 points, a further recovery of 429.20 points or 1.14%, from the previous week’s close at 37,491.40 points. The highest open interest for calls and sales is at 38,000 for both options. This level will play an important role in Bank Nifty.

On the options side, the put write position at the strike price of 37,500 remained intact, which is likely to act as an intermediate support while the higher sell base remained intact at the level of 37,000. This is a buy in the dip market. After such a bullish move, a break in the index seems possible. However, dips should be bought until the index hits the 37,000 level.

The highest call base for the current week is placed at the 38,000 strike and the index is hovering around these levels. Closing in the OI should provide the required ignition to the index. Then the index would head towards the 39000 level.

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