Analyzing India

Derivative Expiry: Options Data Point Towards This Level Being An Inflection Point For The Markets


The NIFTY50 ($NIFTY) saw an unexpected surge in trading on Tuesday, ultimately ending the session with decent gains. The expiry of the current derivative series is to come up on Thursday, March 28; the Options data on NIFTY throws up some useful insights.

Let's examine the 10 ATM Options for NIFTY, which expires Thursday, March 28, 2019. The picture above shows highest Call OI built up at 11500 levels. The strike price, which is where the highest Call OI is built up, often acts as resistance in the immediate short term. In all likelihood, the 11500 level is likely to pose good resistance to the markets.

Another interesting point to note is that the strike price of 11400 shows the second highest call OI built up after 11500, along with the highest Put OI at that point. This means that the level of 11400 is likely to act as an inflection point for the NIFTY over the next two days. Markets may trade in a range, but any slip below 11400 will enhance possibilities of a deeper cut.

The 11500 point level reaffirms itself as a major resistance point once again if we examine the 10 ATM Options, expiring at April 04, 2019.

 As of today, the ATM Options that expire April 04, 2019 also show 11500 being the point where there is the highest Call Open Interest built up.

If we take a very short term view, we can conclude that NIFTY is facing stiff resistance at the 11500 level as per the Options data (though this can, of course, shift!); any move below 11400 can induce some more weakness going forward.

Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst

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Milan Vaishnav
About the author: , CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India's most accurate "Daily / Weekly Market Outlook" -- A Daily / Weekly Newsletter,  currently in its 15th year of publication. Milan's primary responsibilities include consulting in Portfolio/Funds Management and Advisory Services. His work also involves advising these Clients with dynamic Investment and Trading Strategies across multiple asset-classes while keeping their activities aligned with the given mandate. Learn More
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