MUMBAI: Traders on Monday sold a significant quantity of front month Nifty put options at 10,800, indicating the bulls are on top, for now, reports Ram Sahgal. They are wagering for an expiry at the upper end of the 10,700-11,000 range by or on February 28, when the options expire. These expectations could be up-ended if geopolitical tensions escalate, warn analysts.
That the put call ratio (PCR) jumped to 1.22 on Monday from 1.08 Friday, and the market’s fear gauge, India Vix, slipped On Monday, as markets rose, traders sold 11.45 lakh shares (75 share equal one Nifty contract) at the 10,800 strike, taking the total open positions at the strike to 34.25 lakh. The 10,700 put has maximum open positions (35.43 lakh shares) and the 11,000 call has maximum OI of 38.41 lakh shares.
Market mavens now suggest doing options strategy called bull call spreads, expecting limited upside to 11,000-11,200. While Chandan Taparia of Motilal OswalNSE -2.32 % Securities recommends the
Market mavens now suggest doing options strategy called bull call spreads, expecting limited upside to 11,000-11,200. While Chandan Taparia of Motilal OswalNSE -2.32 % Securities recommends the purchase of a front month 10,850 call option and simultaneous sale of a 10,950 call; Rajesh Baheti of Crosseas Capital advises doing an 11,000-11,200 call spread for the March 28 series.
Essentially, both these strategies bank on limited upside.
Viral Berawala, chief investment officer at Essel Mutual Fund, said markets could have a shy at the 11,000-11,200 levels, keeping with a global rally, but could face significant resistance at those levels.
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