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Bank Nifty support at 34000, use Call Ladder strategy in Nifty to make profits on weekly F&O expiry day

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Nifty Put options OI distribution shows that 16,000 has highest OI concentration followed by 16,100 & 15,900 which may act as support for current expiry

By Rajesh Palviya

In Nifty current series there has been a Short Build Up witnessed with decrease in price of -3.24% and increase in OI by 21% as on Wednesday wherein there was addition of 17.83 lakh shares in OI, increasing from 85.15 lakh to 102.99 lakh shares. Nifty current month rollover stands at 21.26% as on Wednesday, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.69 compared to 0.70 of last week, indicating a bounce back. India Vix, a market volatility indicator often called the fear gauge, is currently trading 22.80% compared to 20.29% of last week. Implied Volatility of Nifty ATM options for the current series is at 21.65% in contrast to 20.05% of last week, indicating volatile movement on either side in the expiry session.

Nifty Put options OI distribution shows that 16,000 has highest OI concentration followed by 16,100 & 15,900 which may act as support for current expiry and on the Call front 16,500 followed by 16,400 & 16,300 witnessed significant OI concentration and may act as resistance for current expiry. 

In weekly options there was Call writing seen at 16,500 strike followed by 16,400 & 16,300 while on the Put side noticeable activity of writing was witnessed in 16,000 ,16,200 & 16,100 strike prices. Options data suggest an immediate trading range between 16,500 and 16,000 levels.

Nifty Option OI concentration

Nifty Option OI Change 

Nifty Bank Outlook 

In the current series there has been a short addition witnessed in Bank Nifty Fut with an decrease in price of -4.76% and increase in OI by 39% as on Wednesday wherein there was addition of 9.81 lakh shares in OI, increasing from 25.20 lakh to 35 lakh shares. Bank Nifty current series rollover stands at 9% as on Wednesday, while Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.85 compared to 0.86 of last week indicating flat-to-positive move.

Bank Nifty Put options OI distribution shows that 34,000 has highest OI concentration followed by 34,500 & 33,500 which may act as support for current expiry and on the Call front 35,000 followed by 36,000 & 35,500 witnessed significant OI concentration and may act as resistance.

In weekly options Call writing seen at 35,000, 35,200 & 35,500 strike while on the put side it was seen at 34,500 , 34,000 & 34,400 Options data indicated an immediate trading range between 35,500 and 34,000 levels.

Bank Nifty OI Concentration 

Bank Nifty OI Change 

Nifty 50 trading strategy for weekly F&O expiry day

The strategy which we are suggesting for this weekly expiry dated 19th May is a Moderately Bullish strategy called as Call Ladder, which involves Buying of one lot of Nifty 16,200 Call @ 205 & selling of one lot each of 16,400 Call @ 112 & one lot of 16,600 Call @ 54. The cost of the strategy involves outflow of Rs 1,950 which is the maximum loss if Nifty trades & remains below 16,250 levels on expiry. The maximum profit of Rs 8,050 will be attained at 16,400 levels, while strategy will start making loss above 16,750, hence it’s advisable to exit the strategy in total to avoid unlimited losses above 16,750. Break Even points of the strategy are 16,761 on upside & 16,239 on the lower side.

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

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