F&O Manual: Traders can initiate cross-calendar put spreads on Bank Nifty
Nifty saw a significant unwinding of the 18,000 short straddles for the February expiry but there was no formation of fresh short straddles, indicating traders are waiting for tomorrow's open to create their straddle positions
Markets failed to find direction for another day on February 21. Nifty closed down 0.1 percent or 18 points at 17,826.70. Analysts believe markets may continue to witness bouts of intra-day volatility and trade. (Blue bars show volume and golden bars open interest or OI).
On the options front, the 18,000 level saw both calls and put unwinding. Some fresh put writing was seen at 17,800 as bulls tried to fight valiantly. Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform, said Nifty saw a significant unwinding of the 18,000 short straddles for the February expiry but no creation of fresh short straddles indicating that they are waiting for tomorrow's open to create their straddle positions. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)
On the weekly expiry, most put writing was seen at 40,400 and most call writing was seen at 41,000 as they emerge as support and resistance. Another interesting point to note about the Bank Nifty Index OI data is that there has been a huge shorting at the 40,500 call of next month's expiry. “It is important to note that this is an ITM option or in-the-money call option and this signals bearishness in the Bank Nifty index for the coming month. Traders can look to initiate cross calendar put spreads on the Bank Nifty index with a combination of both weekly and monthly expiries,” said Ghose. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)
India Energy Exchange saw a long buildup. A long build-up is a bullish sign that happens when open interest and volume increase with the rise in share price. NTPC, Siemens, Astral, Voltas and Tata Power were others that saw a heavy long buildup. (Bars reflect a change in OI during the day. Red bars show call option OI and green put option OI.)
Ambuja Cements saw massive trader interest as OI rose to 107 percent of the market-wide limit. It will likely see unwinding from tomorrow onwards. The stock witnessed a short buildup. 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 a change in OI during the day. Red bars show call option OI and green put option OI.)
Aditya Birla Fashion Retail, Adani Enterprises, Canara Bank and Bank of Baroda were others that saw short buildup. (Percentage reflects a change in futures price during the day.) Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
has five years of experience covering capital markets. He primarily writes on stocks with special focus on PMS-AIF industry, telecom and new-age companies. His last stint was with The Economic Times where he wrote on stock markets and led IPO reportage.
