Expiry Knocking!

Penultimate day to the expiry and there are mixed signals coming from different sides. Crude oil and North Korea testing another missile continues to be the worry while domestically no major cues available and little worry seems to be the dropping GST collections for the month of October. All these are the minor news and that might not affect the markets at all.

The real players today are the technicals back on the expiry happening tomorrow. With the roll over positions standing at 40% many are taking their positions to the next series and today and tomorrow will add lot of open interest on the cues available. Nifty premium is almost flat at 3 rupees and now it has become insignificant. But the NIFTY december premium is also at 43 rupees which is slightly lower as the series hasn’t yet started. That shows some bearishness in the Futures market.

Futures and Options!

On the Options market there has been a rapid call unwinding that is happening at 10400 and 10500 levels that is surprising. 10400 call saw a volume of 4.5 lakh today and 10500 call saw 4.1 lakh volume. Most of them are short positions. 10500 has the highest open interest as of now. Another big worry is the put selling converting into put buying. Yesterday saw a bit of put buying happening at 10200 and 10300 puts. Both these puts saw open interest dropping by 8.75 lakh and 6.4 lakh contracts. We have seen a minimal put selling happening at 10200 levels. All these indicates only one thing. The upside seems to be capped at 10430 levels but down side is open to as low as 10200!!

The put call ratio also confirmed to that when it dropped from 1.45 at the beginning of yesterday to 1.33 at the end of the day.

What is the NIFTY strategy for today?

Focus on options!! It doesn’t mean you should neglect futures but there are some attractive propositions available on both put and call side. A short strangle could win you some money. Take it out of the money and also you can try a short position in Nifty Futures at open when NIFTY opens around 10400 is a good idea. The Target can be 10350. Intra day there is a lot of volatility and you can benefit from any fall that happens. As I again tell you, focus more on options and you will make money. Watch out for my twitter account as I keep giving the appropriate options strategy I give as the day progresses.