F&O: Market seeing strong tug of war between Call and Put option writers
On the options front, maximum Put open interest was seen at 11,000 followed by 10,700.
Nifty50 failed to surpass Friday’s high and witnessed sustained selling pressure throughout Monday’s session. It corrected around 200 points from higher levels and faced a hurdle near its falling supply trend line by connecting the swing highs at 11,981, 11,706 and 11,181 levels.
It formed a Bearish Marubozu on the daily chart, which implied bear dominance as the index erased half of the recovery of last week. Now, as long as the index holds below 11,111 level, it could retest multiple support at 10,850 and then 10,780 levels, while on the upside hurdles are seen at 11,111 and then 11,150 levels.
On the options front, maximum Put open interest was seen at 11,000 followed by 10,700 levels while maximum Call OI was at 11,000 followed by 11,500 levels. There was Call writing at 11,000 followed by 11,200 levels, while Put unwinding was seen at all immediate strike prices, while minor Put writing was seen at strike price 10,600. Options data suggested a trading range between 10,700 and 11,200 levels. Maximum Call and Put open interest in monthly contract was at strike price 11,000, which suggested a strong tug of war between Call and Put option writers.
India VIX moved up 12.23 per cent to 17.77 level. A big jump in volatility has wiped out hope of a decent bounceback as the bears were again back in driver’s seat.
Bank Nifty opened negative and remained under pressure throughout the session, as it wiped out the gains of previous two sessions. It formed a bearish candle on the daily scale and fell by around 700 points to close below 27,750 mark. It is facing a hurdle at higher levels. As long as it holds below 28,000, the index could drift towards 27,500 and then 27,350 levels, while on the upside a major resistance was seen in the 28,350-28,500 zone.
Nifty futures closed negative at 10,918 with a loss of 1.84 per cent. Long buildup was seen in Indiabulls Finance, RIL, Auro Pharma and Sun Pharma while shorts were seen in Just Dial, Manappuram Finance, Bharat Forge and YES Bank.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)