F&O view: Call writing at 7,800, 8,000 levels to cap Nifty upside
Most traders are not expecting Nifty50 to reclaim the 8,000 mark anytime soon, which holds maximum Call open interest at 85.52 lakh contracts.
By Kshitij Anand, ET Online | Updated:
NEW DELHI: The Nifty50 was trading around its crucial support level of 7,800 on Monday, but Friday’s derivative data suggests fresh Call writing at strike prices 7,800, 7,900 and 8,000 will cap the upside.
Options data suggests the market could well enter the consolidation zone for some more time. The resistance level for the market stands at strike price 8,000, while there is a strong base for the market at strike price 7,800.
Fresh Call writing was seen at strike prices 7,800 (8.60 lakh contracts added), 7,900 (5.43 lakh contracts added) and 8,000 (19.74 lakh contracts added), which will now act as stiff resistance levels for the index.
The general rule of the thumb is that traders sell a Call option only when they have a bearish view, which means most traders are not expecting Nifty50 to reclaim the 8,000 mark anytime soon, which holds maximum Call open interest at 85.52 lakh contracts.
The maximum open interest (OI) in the current series is visible at the Call option of strike price 8,000 while among Put options, it shifted from strike price 7,700 to 7,800. The maximum Put open interest of 51.89 lakh contracts stands at strike price 7,800, which suggests a strong base for the market, followed by strike price 7,700, which holds 50.85 lakh contracts in open interest.
"In Call options, strike price 8,000 saw addition of huge fresh positions, followed by strike prices 7,800, 8,200 and 7,900. In Put options, we witnessed unwinding at strike prides 7,900 and 7,700,” Angel Broking said in a note.
There was some bit of Put unwinding on Friday. Strike price 7,900 shed 9.55 lakh contracts in open interest while strike prices 7,800 and 7,700 shed 4 lakh and 6.31 lakh contracts in Put open interest, respectively, on Friday.
Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 1494 crore in cash market on Friday. But the buying figure was mainly because of a block deal of 8.16 lakh shares in Eicher Motors.
They sold positions worth Rs 238 crore in index futures with a fall in OI, indicating long unwinding. In index options, FIIs were net sellers of positions to the tune of Rs 414 crore with a rise in OI.
"Since FIIs are not forming any fresh positions in index futures, and their activity in index options remains subdued, we may see rangebound movement in Nifty50,” Angel Broking said in a note.
The domestic brokerage firm has advised traders to wait for further development on derivatives front to initiate fresh positions in index futures. The support remains intact at 7,670 – 7,700 levels.
F&O trends:
A price rise with a rise in open interest suggests long buildup. Here is a list of top stocks where long positions are building up.
A fall in price with a rise in open interest suggests short buildup. Here is a list of top stocks where short positions are building up.
Options data suggests the market could well enter the consolidation zone for some more time. The resistance level for the market stands at strike price 8,000, while there is a strong base for the market at strike price 7,800.
Fresh Call writing was seen at strike prices 7,800 (8.60 lakh contracts added), 7,900 (5.43 lakh contracts added) and 8,000 (19.74 lakh contracts added), which will now act as stiff resistance levels for the index.
The general rule of the thumb is that traders sell a Call option only when they have a bearish view, which means most traders are not expecting Nifty50 to reclaim the 8,000 mark anytime soon, which holds maximum Call open interest at 85.52 lakh contracts.
The maximum open interest (OI) in the current series is visible at the Call option of strike price 8,000 while among Put options, it shifted from strike price 7,700 to 7,800. The maximum Put open interest of 51.89 lakh contracts stands at strike price 7,800, which suggests a strong base for the market, followed by strike price 7,700, which holds 50.85 lakh contracts in open interest.
"In Call options, strike price 8,000 saw addition of huge fresh positions, followed by strike prices 7,800, 8,200 and 7,900. In Put options, we witnessed unwinding at strike prides 7,900 and 7,700,” Angel Broking said in a note.
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There was some bit of Put unwinding on Friday. Strike price 7,900 shed 9.55 lakh contracts in open interest while strike prices 7,800 and 7,700 shed 4 lakh and 6.31 lakh contracts in Put open interest, respectively, on Friday.
Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 1494 crore in cash market on Friday. But the buying figure was mainly because of a block deal of 8.16 lakh shares in Eicher Motors.
They sold positions worth Rs 238 crore in index futures with a fall in OI, indicating long unwinding. In index options, FIIs were net sellers of positions to the tune of Rs 414 crore with a rise in OI.
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"Since FIIs are not forming any fresh positions in index futures, and their activity in index options remains subdued, we may see rangebound movement in Nifty50,” Angel Broking said in a note.
The domestic brokerage firm has advised traders to wait for further development on derivatives front to initiate fresh positions in index futures. The support remains intact at 7,670 – 7,700 levels.
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F&O trends:
A price rise with a rise in open interest suggests long buildup. Here is a list of top stocks where long positions are building up.
A fall in price with a rise in open interest suggests short buildup. Here is a list of top stocks where short positions are building up.
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