F&O Manual | Traders position themselves with rangebound expectations; Siemens, Delta Corps in focus

The market continued to move in a range for another day on Tuesday and traders maintained that the index may not see any breakout during the day, despite the Nifty surging 110 points past 18,000.

Put writers were much more active on January 17 – especially in the out of the money options – as they created some fresh support for the Nifty index at 17,800 and 17,900 levels.

Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.

Rajesh Sriwastava, an equity derivatives trader, said 18,100 strike have the highest call build and hence it would be difficult for the Nifty to cross that level. Hence, he is selling 18,100 and above call options.

However, some call unwinding has been seen at 18,100 level as the market moves higher.

Bank Nifty also traded higher by 0.4 percent to 42,325.45, thanks to gains in HDFC Bank and Federal Bank. Highest call writing was seen at 42,300 and 42,000 strikes.

Ankush Bajaj, a Chhattisgarh-based derivatives trader, said he was long on both Nifty and Bank Nifty with stop-loss close to day's low. However, he expects rangebound setup to continue in the market.

The sectoral matrix was mixed. Short buildup – a bearish phenomenon that happens when the price goes down and open interest (OI) rises – was seen in telecom, media and finance. Meanwhile, long buildup – a bullish phenomenon characterised by OI and prices rising in tandem – was seen in FMCG, power and technology, among others.

Siemens, which received a big order from Indian Railways, was the apple of the eye for traders as OI rose over 30 percent along with prices. Delta Corp, meanwhile, saw 19 percent rise in OI along with drop in prices. Indus Towers also saw short buildup.

Disclaimer: Trading in futures and options markets is extremely risky. Traders and experts mentioned above may not be SEBI registered. Hence, trades they have taken should not be construed as investment or trading advice. Please consult a financial adviser before taking any trades.