Top cues from F&O mart: Call writing at 8,700, 8,900 no good sign for bulls

NEW DELHI: The Nifty50 closed above its crucial support level of 8,700 on Monday, but fresh Call writing at strike prices 8,700, 8,800 and 8,900 is likely to cause fresh trouble for the bulls, options data showed.

Put Option activity: There was hardly any Put writing, but Put unwinding was seen at strike prices 8,700 (10.5 lakh contract shed), 8,800 (12.97 lakh contracts shed), 8,900 (14.5 lakh contracts shed), and 8,500 (2.8 lakh contracts shed).

Total Put open interest of 57.58 lakh contracts stood at strike price 8,600, which will act as a crucial base for the market in the September series, followed by strike price 8,500, which saw accumulation of 54.40 lakh contracts, while strike price 8,700 had 44.58 lakh contracts in open interest.


Call Option activity: Call writing was seen at strike prices 8,700 (6.24 lakh contracts added), 8,800 (11.58 lakh contracts added), 8,900 (10 lakh contracts), and 8,600 (1.87 lakh contracts added).

The maximum Call open interest of 57.31 lakh contracts stood at strike price 9,000, which will act as a key resistance for the index in the September series, followed by strike price 8,900 which has accumulated 46.04 lakh contracts, while strike price 8,800 had 38.49 lakh contracts in open interest.

FII activity: Foreign institutional investors ( FIIs) continued to sell in both cash market and in index futures. On Monday, they sold equities worth Rs 594 crore.

They were net sellers of positions worth Rs 598 crore in index future with a rise in OI, indicating blend of fresh short formations and long unwinding in last trading session.

On the index options front, FIIs bought positions worth Rs 5,578 crore with rise in OI. In Call options, strike prices 8,700 and 8,900 remained active and they also saw addition of a good amount of positions.

“These are long positions formed by weaker hands. On the other hand, in put options, we hardly saw any strikes adding meaningful OI,” Angel Broking said in a note.

“At the start of the September series, FIIs formed meaningful shorts in Put options of strike prices 8,700 and 8,900. On Monday, they lightened most of these positions, anticipating further correction,” the report said.

India VIX: The India Volatility Index (VIX), a gauge of the market’s short-term expectation of volatility, expanded to 15.24 from 13.23 recorded in the previous session.

PCR: The Nifty50 Put-Call ratio (PCR) contracted to 1.19. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.