F&O Manual: No trend visible in Nifty; deploy bull call spread, say analysts

The Nifty remained range bound for another day and eventually closed down by 0.1 percent or 18.45 points to 17,895.70. Its futures contract fell 0.1 percent as well. Analysts expect the index to be range bound for now. Rohan Patil, Technical Analyst, SAMCO Securities, said traders would be advised to wait patiently for the prices to break above 18,150 or below 17,800 levels to initiate the next actionable move because presently market is in no trading zone. (Blue bars show volume and golden bars open interest (OI).)

On the option front, 17,900 and 18,000 levels saw call writing while 17,800 and 17,900 saw put writing. “I expect the Nifty to trade in a range. Given tomorrow is expiry and we are at the lower end of the range, a slight pullback can’t be ruled out. Traders can deploy bull call spreads by buying 17,900 calls and selling 18,000 calls,” said Rajesh Palviya, derivatives analyst at Axis Securities. (Bars reflect the change in OI during the day. Red bars show call option OI and green put option OI.)

Bank Nifty, meanwhile, rose about 0.52 percent at 42,232.70. “The index found support on the lower end at 41700, where strong buying was visible. The index is likely to remain volatile in the coming session, and a break below 41,700 will accelerate the move on the downside. The upper end of the intermediate resistance zone is seen at 42,350-42,400, and the short covering is expected towards the 42,700 level," said Kunal Shah, Senior Technical Analyst at LKP Securities. (Bars reflect the change in OI during the day. Red bars show call option OI and green put option OI.)

Tata Communications saw a massive long buildup with higher activity in out-of-the-money (OTM) strikes. A long build-up is a bullish sign that happens when open interest and volume increase with the rise in share price. NMDC, Indian Oil, HPCL and Indigo were others that saw log buildup. (Bars reflect the change in OI during the day. Red bars show call option OI and green put option OI.)

Bharti Airtel, which was downgraded by JP Morgan, saw a massive short buildup as open interest in the counter surged 17 percent. The short build-up is a bearish sign that takes place when the price of a stock falls, along with high open interest and volume. (Bars reflect the change in OI during the day. Red bars show call option OI and green put option OI.)

Laurus Labs, SRF, Cipla and Apollo Hospitals were others that saw a short buildup. (Numbers reflect the change in futures prices.)