F&O view: Option writers moving towards strike 8,100, Nifty looks capped at this level

NEW DELHI: The Nifty50 staged a smart bounceback on Thursday, which pushed the index above its crucial psychological level of 7,950. Going by the options pricing data, the index is likely to remain rangebound till expiry as it inches towards key resistance levels.

The next big resistance level for the index is 8,000, which has maximum Call open interest of 68.10 lakh contracts. But strike price 8,100 will pose a major hurdle for the index going by the options activity on Wednesday.

Fresh Call writing was witnessed at strike price 8,100 (10.31 lakh contracts added) and unwinding was seen at strike price 8,000 (6.3 lakh contracts shed). This shows more option writers are moving towards strike price 8,100, which now has second highest total Call open interest of 57.21 lakh contracts.

The support for the index will come at 7,800 and 7,900 levels, where fresh Put writing was seen. Fresh Put writing was seen at strike price 7,900 (13.64 lakh contracts added), 7,800 (0.55 lakh contracts added) and 7,700 (1.4 lakh contracts added), which will provide the much-needed support.

Maximum Put open interest is placed at strike price 7,800, which has a total Put open interest of 56.15 lakh contracts, while strike price 7,500 has the second highest Put open interest of 54.72 lakh contracts.

"Looking at the options data, maximum Put OI is intact at strike price 7,800, which also provides major medium-term support near the 7,777 zone, while fresh put writing at strike price 7,900 is shifting the support towards the 7,878-7,850 zone,” Chandan Taparia, Derivatives & Technical Analyst - Equity Research at Anand Rathi Financial Services, told ETMarkets.com.

"On the Call side, maximum OI is intact at strike price 8,000 and that is keeping the upside limited for the current series,” he said.

Activity of foreign institutional investors (FIIs) in the cash market was subdued on Wednesday while in index futures, they bought positions worth Rs 1,328 crore, which led to a rise in OI, suggesting fresh long formation in last trading session.

In index options, FIIs were net sellers of positions worth Rs 1,152 crore with some rise in OI.

In Call options, strike price 8,100 has been seeing continuous addition of fresh longs from the past 2-3 sessions. Some unwinding was visible in Call options at strike price 8,000, which may be short covering by call writers of this option.

"The Put option at strike price 7,900 saw addition of good OI. We believe FIIs are writing positions at this strike price, expecting expiry above these level,” Angel Broking said in a report.

"Maximum OI in current series is visible in the Call of strike price 8,000 while in Put options, the same has shifted from strike price 7,500 to 7,800,” the report said. The brokerage said the Nifty50 is likely to test the 8,000 level in the current series.

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