F&O expiry: Nifty to trade in 18200-18600 range, Bank Nifty may reclaim 40000; check trading guide

The strategy which we are suggesting for the week is a Bullish strategy namely CALL LADDER.

By Rajesh Palviya

In the Nifty’s current series, a short covering has been witnessed with an increase in price of 3.94% and decrease in OI by -5.48% as of Wednesday wherein there was unwinding of 6.38 lakh shares in OI, decreasing from 116.52 lakh to 110.14 lakh shares. Nifty October rollover stands at 18.31%, while Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.91 compared to 1.53 of last week, indicating positive bias.

India VIX, a market volatility indicator often called the fear gauge, is currently trading 18.31% compared to 15.77% of last week.Implied Volatility of Nifty ATM options for the current series is at 18.23% in contrast to 14.18% of last week, indicating volatile movement on either side in coming session.

Nifty Put options OI distribution shows that 18,000 has highest OI concentration followed by 18,200 & 18,100 which may act as support for current expiry and on the Call front 18,500 followed by 18,600 & 18,400 witnessed significant OI concentration and may act as resistance for current expiry.

In weekly options, there was Call writing seen at 18,500 strike followed by 18,600 & 18,400 while on the Put side noticeable activity of writing was witnessed in 18,000 & 18,200 strike prices. Options data suggest an immediate trading range between 18,200 and 18,600 levels.

Nifty Open interest Concentration 

Nifty Option OI Change 

Bank Nifty Outlook

In the current series, there has been a short-covering witnessed in Bank Nifty Futures with a increase in price of 5.41% and decrease in OI by -25.35% as of Wednesday wherein there was unwinding of 5.31 lakh shares in OI, decreasing from 20.95 lakh to 15.64 lakh shares. Bank Nifty October rollover stands at 11.51%, while Bank Nifty Put Call Ratio, a sentiment indicator used by traders to gauge the market sentiment and mood, is currently at 0.86 compared to 1.12 of last week indicating positive bias.

Bank Nifty Put options OI distribution shows that 39,000 has highest OI concentration followed by 38,500 & 38,000 which may act as support for current expiry and on the Call front 39,500 followed by 40,000 & 40,500 witnessed significant OI concentration and may act as resistance. In the weekly options Call writing seen at 38,800, 40,000 & 40,200 strike while on the put side it was seen at 39,500, 39,400 and 39,000. Options data indicated an immediate trading range between 40,000 and 39,000 levels.

Bank Nifty OI Concentration 

Bank Nifty OI Change 

Nifty trading strategy for F&O expiry day

The strategy which we are suggesting for the week is a Bullish strategy namely CALL LADDER, which involves Buying of one lot of Nifty 18,300 Call @ 69 & selling of one lot each of 18,400 Call @ 29 & one lot of 18,500 Call @ 11.All the options have weekly expiry of 21st October 2021. We have observed that the highest OI concentration on the call side prevails in the above-mentioned strike price indicating a probable resistance zone & to take the advantage of the same at low cost we are suggesting this strategy.

The maximum profit of Rs 3,550 will be attained at 18,400 levels, while strategy will start making loss above 18,570. The cost of the strategy involves outflow of Rs 1,450 which is the maximum loss if Nifty trades & remains below 18,330 levels, however above 18,570 it’s advisable to exit the strategy in total to avoid UNLIMITED losses. Break Even points of the strategy are 18,570 on Upside & 18,330 on the lower side.

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