F&O expiry: Nifty to trade in 18200-17700, OI signals support at 38000 for Bank Nifty; check trading strategy

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Nifty, bank niftyThe strategy which we are suggesting for the weekly EXPIRY is a Bearish strategy namely PUT LADDER

By Rajesh Palviya

In the Nifty current series, there has been a Long Unwinding witnessed with a decrease in price of -0.02% and decrease in OI by -4.73% as of Wednesday wherein there was unwinding of 4.93 lakh shares in OI, decreasing from 104.13 lakh to 99.20 lakh shares. Nifty November rollover stands at 15.69%, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.81 compared to 0.99 of last week, indicating flat-to-negative bias.

India Vix, a market volatility indicator often called the fear gauge, is currently trading 14.98% compared to 16.15% of last week. Implied Volatility of Nifty ATM options for the current series is at 14.42% in contrast to 15.07% of last week, indicating flat-to-low volatile movement on either side in expiry session.

Nifty Put options OI distribution shows that 17,800 has highest OI concentration followed by 17,900 & 17,700 which may act as support for current expiry and on the Call front 18,200 followed by 18,100 & 18,0 00 witnessed significant OI concentration and may act as resistance for current expiry. In the weekly options there was Call writing seen at 18,200 strike followed by 18,150 & 18,100 while on the Put side noticeable activity of writing was witnessed in 17,900 & 18,000 strike prices. Options data suggest an immediate trading range between 17,700 and 18,200 levels.

Nifty Open Interest Concentration 

Nifty Option OI Change

Bank Nifty Outlook

In current series there has been a Long Unwinding witnessed in Bank Nifty Fut with a decrease in price of -03.92% and very marginal decrease in OI by -0.13% as of Wednesday, wherein there was unwinding of 0.026 lakh shares in OI, decreasing from 20.14 lakh to 20.12 lakh shares. Bank Nifty November rollover stands at 17.58% while, Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.55 compared to 0.64 of last week indicating flat-to-negative bias.

Bank Nifty Put options OI distribution shows that 38,000 has highest OI concentration followed by 37,500 & 37,000 which may act as support for current expiry and on the Call front 39,000 followed by 38,500 witnessed significant OI concentration and may act as resistance.
In the weekly options Call writing was seen at 38,500, 39,000 & 38,200 strike while on the put side it was seen at 38,000 , 37,800 & 37,300 Options data indicated an immediate trading range between 38,800 and 37,300 levels.

Bank Nifty Open Interest Concentration 

Bank Nifty Option OI Change

Nifty trading strategy for weekly F&O expiry day

The strategy which we are suggesting for the weekly EXPIRY is a Bearish strategy namely PUT LADDER, which involves Buying of one lot of Nifty 17,950 PUT @ 82 & selling of one lot each of 17,850 PUT @ 36 & one lot of 17,750 PUT @ 12. We have observed that the high OI concentration on the PUT side prevails in the above-mentioned strike price and to take the advantage of the same at low cost, we are suggesting this strategy.

The maximum profit of Rs 3,300 will be attained at 17,850 levels, while strategy will start making loss below 17,620. The cost of the strategy involves outflow of Rs 1,700 which is the maximum loss if Nifty trades & remains above 17,916 levels, however below 17,615 it’s advisable to exit the strategy in total to avoid UNLIMITED losses. Break Even points of the strategy are 17,916 on Upside & 17,616 on the lower side.

Bank Nifty strategy

The strategy which we are suggesting for the weekly EXPIRY is a Bearish strategy namely PUT LADDER, which involves Buying of one lot of Bank Nifty 38,100 PUT @ 202 & selling of one lot each of 37,800 PUT @ 91 & one lot of 37,500 PUT @ 37.We have observed that the high OI concentration on the PUT side prevails in the above mentioned strike price and to take the advantage of the same at low cost, we are suggesting this strategy.

The maximum profit of Rs 5,650 will be attained at 37,800 levels, while strategy will start making loss below 37,100. The cost of the strategy involves outflow of Rs 1,850 which is the maximum loss if Bank Nifty trades & remains above 38,000 levels, however below 37,100 it’s advisable to exit the strategy in total to avoid UNLIMITED losses. Break Even points of the strategy are 38,026 on Upside & 37,126 on the lower side.

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

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