On the upper side, 11,040 acts as a formidable resistance as traders have sold 34.98 lakh shares at the 11,000-strike call.
Option sellers could stoutly defend the 10,800 level till expiry of the current contracts five days from now. That’s because the outstanding positions (OI) at the 10800-strike put is the highest at 37.97 lakh shares. However, if the market tests their breakeven price around 10,730, it could rapidly break down towards 10,600, the data indicate, as they cover (buy back) their short puts.
Navneet Daga, vice-president at YES Securities, and Rohit Srivastava, founder, IndiaCharts, expect 10,800 to hold, subject to status quo being maintained in the Persian Gulf, among others. Daga suggests selling a strangle, involving the sale of a 10700 put and an 11000 call for a combined Rs 80 a share (75 shares to a lot) for the current expiry on September 26. He expects sellers could pocket much of the premium with the market staying within the range.
On the upper side, 11,040 acts as a formidable resistance as traders have sold 34.98 lakh shares at the 11,000-strike call. The range for the market, based on September 26 expiry options, is 10,730-11,040.
Any upside will depend on short covering of net cumulative short positions by FIIs. On Wednesday, these constituents were cumulatively net short index futures (Nifty and Bank Nifty) by 1,10,918 contracts. Significantly, their net longs of 35,703 contracts on index call options were the lowest since May 23’s level of 31,824 contracts. Plus they have purchased a significant quantity of index put options
