Nifty Open Interest Analysis

[trdstudent]

..... Expiry range seems to be 5700-5800.....
Lets see if this particular strangle works ..
sell 5800 CE @26.20, Sell 5700 PE @46.05 Total inflow 72

Expectations : Range bound between 5700-5800

@OT am not sure why u think 5700 is the bottom of this series .. it should be at least 5665(5+/-) spot if not 5595/85 .

It may be way too early to settle on a the expiry range. The way PEs got liquidated today a break of 5700 is very easy.

The charts look aggressively bearish. Till, atleast, two neutral bars are formed further fall is on the cards. Strong support, from the charts, lies only at 5600. Before 5600 they're house of cards.

@jamit , am totally agree with u .... the chart is indicating 5665/5595 levels . If spot brk 5724/25 level only then may be a pullback up to 5863 around spot

 

[Option.Trader]

can someone clarify!!!!!!

Its the way of interpreting data , trend is strong if OI is higher , a negative OI with higher prices & lower change in Oi means traders have booked profits at lower levels, I'll try and list a picture tomo

 

[Option.Trader]

@OT am not sure why u think 5700 is the bottom of this series .. it should be at least 5665(5+/-) spot if not 5595/85 .


@jamit , am totally agree with u .... the chart is indicating 5665/5595 levels . If spot brk 5724/25 level only then may be a pullback up to 5863 around spot

Absolutely, it may logically test 5666, but Im not to concerned at the exact price as I'm more comfortable writing than predicting exact price & option data points towards that

 

[trdstudent]

Absolutely, it may logically test 5666, but Im not to concerned at the exact price as I'm more comfortable writing than predicting exact price & option data points towards that

ok ...got it . But if u don't hv a trgt price lvl then how do u zero in an option strk to write ?
For exmple : if u write 5700 pe and nifty close around 5665 then doesn't that mn u r in loss ( assuming u did not exit before that ) .Am really confused !!!

 

[Option.Trader]

ok ...got it . But if u don't hv a trgt price lvl then how do u zero in an option strk to write ?
For exmple : if u write 5700 pe and nifty close around 5665 then doesn't that mn u r in loss ( assuming u did not exit before that ) .Am really confused !!!

That's philosophy of OI trading. Look for levels of maximum OI, which I have define as >70l to take position, of course you need to have a stop loss which is automatically provided by the other strike level

 

[jamit_05]

Yesterday, 5700 CE added 20 L in OI. This is the strongest indication in yesterdays trading and it is a huge step towards making 5700 the ceiling for this expiry. Watch for its liquidation to get a cue into the strength of the trend.

 

[jassinko]

Yesterday, 5700 CE added 20 L in OI. This is the strongest indication in yesterdays trading and it is a huge step towards making 5700 the ceiling for this expiry. Watch for its liquidation to get a cue into the strength of the trend.

that means nifty wont close below 5700 or is it that it will definitely close below 5700????

 

[jamit_05]

that means nifty wont close below 5700 or is it that it will definitely close below 5700????

Too early to jump to conclusion. Just highlighted an OI worth watching.

Today again 5700 CE OI up 10%, means writers are starting to get confident of it. But no conclusions till OI crosses 70 L.

 

[jamit_05]

@ OT Require your input on this indicator.

We can derive one trend indicator from the options chart, look at the current scenario:

5800 CE OI 80L (>70L)
5900 CE OI 84L (>70L)
6000 CE OI 98L (>70L)

This clearly shows writers, market makers confidence that the upside is capped.
The situation was reverse before RBI news where PEs were lapped up with such high OIs.

Now on the PE side,

5700 PE OI 90L (>70L)
5600 PE OI 77L (>70L, but weak)

So, one could conclude that the trend is bearish based on the markets makers confidence. Keep an eye for this situation reversing to change trend.

As for expiry range, 5700 looks like the bottom for now. It has survived two assaults.

 

[jamit_05]

5700 PE has almost 100 L in OI, which makes it a strong support. It has to come below 70L for further downfall... i.e. a huge covering of 30L. A big step, which could cause a sharp fall. Unlikely but lets see.