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Call Liquidation In Upper Strikes Taking Place

Author: Dhirender Singh Bisht/Thursday, April 15, 2021/Categories: Exclusive

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Call Liquidation In Upper Strikes Taking Place

The domestic stock market keeps on correcting with some bounces on concern of rising number of Covid cases. Profit booking and panic selling seen in some stocks. IT and pharma sector show some strength whereas some panic selling seen in banking stocks. In weekly contract highest Open Interest concentration on call side is at 15,000 strike followed by 14,700 strike. Whereas on Put side, the highest OI is at 14,000 strike followed by 14,300 strike. Some Put writing was seen in OTM strikes whereas Call liquidation in upper strikes witnessed in weekly contracts. In monthly contract highest Open Interest contract band is at 15,000-14,000 where highest position is outstanding. Call writers and Put writers are active, but not with much quantity in monthly contract. From last few sessions, there is a short building in power sector seen whereas long build-up seen in IT stocks. The India VIX is trading around 20-22 range right now. The VIX is trading in broader range of 26-16 since long. From past few sessions, it was observed that spikes are rising in India VIX due to high intraday volatility. The Intraday range in India VIX is quite high as compare to the normal scenario. The Implied Volatility (IV) gap between ATM (At The Money) Calls and Puts in weekly contract is wide. As uncertainty ahead the Put writers are charging high Implied Volatility, which will attract Put writers to enter in the market. The Nifty straddle for monthly expiry on Tuesday closed at 145 higher as compared to last week that implies the option writers are comfortable at +/-145 points movement in coming sessions. The Bank Nifty straddle for current week is at Rs539, which is higher than previous week. The option max pain for Nifty current week contract is at 14,500 and for BankNifty current week contract is at 31,500 whereas both indices are trading around its high max pain level. In coming sessions, the index is likely to trade in the range of 14,700 to 14,300 beyond these levels can see a good movement.

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