Nifty Open Interest Analysis

[sriram57]

i had purchased bank futures at 8 lots of 11454 and hedged with nifty sell optn 5700ce 10 lots at 25. you thik i can make some money by expiry. value yr comments

 

[Rish]

i had purchased bank futures at 8 lots of 11454 and hedged with nifty sell optn 5700ce 10 lots at 25. you thik i can make some money by expiry. value yr comments

Not a good idea. Option you have only Rs.25 hedge, where as bank nifty if it falls, risk will be high. Take care

 

[sjnanes]

Hi,
what do you see for the 5800ce option for the coming days .there was a mention of increased OI in the 5800ce , is it for writing or buys...

PLease reply , awaiting your advise.

S-jnanesh

 

[Option.Trader]

Zero is the most likely outcome... remember Option writers would tend to write the option that would have the maximum chance of wilting down.. thats what you see with 5800CE and 5600PE... for writers it is limited proft with unlimited downside.. so they better be careful in what they are investing unlike plain vanilla buyers.. and usually they are knowledgeable people.. a.k.a FII's and institutional investors. Its not difficult to see the game being played... with just 35 crores they proped up the market by 50 points on Thursday only to write more calls at a higher premium and trap the Bulls.. its called distribution...
So unless we have a miracle on Monday, expect call writers to laugh all the way to bank.
I have this motto : Trade with Charts not emotion and marry a girl not the stock

 

[sjnanes]

thank you for the response.

 

[Option.Trader]

Not a good idea. Option you have only Rs.25 hedge, where as bank nifty if it falls, risk will be high. Take care

Exactly Nirahjan.. Sriram.. think of it this way.. with the premium on options, you just have a 62.5 point cushion on Bank Nifty.. and even for that the Option has to become zero ... it would be better to cut loss at opening if there is a breakdown and try to salvage what you can with 5700CE

All the best... use caution when trading huge lots at expiry esp with holding position.. each day is different ...u have had 9 Up and 6 down days like this
UUUUDDUDUDUDUUD... which just kills the trader.. friendly advice.. restrict to intraday trades on volatile expiry.

 

[Option.Trader]

Nifty has slipped into a trading range. FII's seem to be playing for the day and between the range

For significant upside, watch these 2 as expiry is coming up
5800CE unwinding needs to happen and 5800PE OI built up should cross 5M
Unless these two happen, it is in the interest of market to expire at these levels
Watch out for 5730 on Spot. If Nifty is able to stay there for considerable period of time, CE unwinding should happen.

 

[timepass]

In the last days of the series, it may be worthwhile to look at the next series data too, maybe the current series action is a hedge against the position in the next series.

 

[Option.Trader]

In the last days of the series, it may be worthwhile to look at the next series data too, maybe the current series action is a hedge against the position in the next series.

Yep... rollover kicks in.. actually doesnt make much sense to analyze options during rollover except for ATM..

almost 24L got rolled over into Nov futures..

Imp thing to note is VIX has collapsed and FII's have traded the highest contracts in F&O today. So we may be able to cross 5725 decisively tomorrow

 

[Option.Trader]

Well the last 10 days have been alternate up and down days...
Its difficult to get to any meaningful conclusion during expiry week, where unwinding naturally occurs to take advantage of buying back premiums at lower cost
But just looking at data in general, looks like FII's have entered fresh short positions. There was more unwinding in Puts than Calls of 5700 levels indicating PE writers were scampering to cover their positions.
Future markets also saw some fresh shorts being initiated
If we didn't have a holiday, i would have bet that Nifty would have opened near 5630 support levels. But who knows after festivities, it will be a new chapter