F&O Manual | Market outlook stays positive but traders take a neutral stand

The market has taken a breather on March 8 after some recovery in the last couple of sessions. The Nifty traded down 20 points as of 10.20am, trading at the 17,691 level.

On the Options front, Put writers converged at 17,600 during the first hour of trading. Some also kept adding positions at 17,650 trying to fight off the bulls. Call writers tried to create pressure shifting their positions lower.

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

Traders were seen taking neutral trades– especially Straddle – mostly at 17,700 strike. Straddle involves either buying or selling both Puts and Calls simultaneously at the same strike price.

One derivative trader said the outlook remains bullish, given that foreign investors have squared off their short positions.

Some mid-sized banks – RBL Bank and Bandhan Bank – saw an increase in short positions. These stocks, along with Bajaj Finance and LIC Housing Finance saw short build up, i.e., rise in open interest but drop in price.

On the other hand, Balrampur Chini Mills, Adani Enterprises and Power Finance Corporation saw long buildup, which is a bullish scenario signified by rise in open interest and price.

Sector wise, technology, metals and banking saw short buildup while infra, and power saw long buildup.

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