Tag Archives: Options Trading

Market Trade Setup 25th April #NIFTY

Expiry day arrives and it comes on the back of 150 point rally, and I was always talking about it in my posts for the last 2 days. Market sensed the mood of the nation in favour of BJP and that gave it a big push. The resistance level of 11700-11720 is broken and now 11700-11850 territory is open for Nifty now. The US markets last night was flat to negative with Dow closing 20 points down and the Asian markets today looks mixed. The first quarter GDP of South Korea comes at just 1.8% which is much lower than expected and that has influenced other markets and except Hong Kong, all the other Asian markets are down. Brent Crude is still stuck at 74 dollar mark and trading at 74.4 dollars.

Coming to the domestics, the heat of election campaign is picking up as the campaigning for the 71 seats of 4th phase reaches the peak and the nominations for the last phase going on. Modi will hold a huge road show in Varanasi today and he will be filing his nomination from there tomorrow in the presence of many NDA leaders. On the Q4 front, the mixed trend of results continues with India bulls housing finance, Bharti Infratel coming up with weak results while the star performer was Ultra tech cement which came up with fantastic numbers and M&M financials also reporting good numbers. Today Biocon, Maruti Suzuki, Rallis India and Tata steel are going to come up with their Q4 results and we need to watch them carefully.

On the derivatives front, expiry day is here and the rollovers to May are very high now and come at 58% with a day still left for expiry. Yesterday there was a monster rally which took the Nifty to 11750 levels and that created a lot of demand for puts again and the Nifty put call ratio rose to 1.65 from 1.30 levels seen at the beginning of the day. Yesterday the turn over was at 14.2 lakh crore which means that there is every chance of 22.03 lakh crore record will be broken today and we will have to see whether it happens or not. Yesterday 11700 put added 11.6 lakh positions and 11650 put added 8.3 lakh positions and 11600 put added 6.7 lakh positions. 11600 put now has the highest open interest and 11700 is not far behind. On the call side, 11800 has the highest open interest which means 11780-11800 could be a resistance.

What is the Nifty call for the day?

Yesterday all your targets would have met and you would have closed all your positions, except the one you have taken with 12000 as the target and today is the time to enjoy the profits. Today we will have a flat opening around 11720-11750 levels and that might be a small resistance and 11780-11800 is a substantial resistance on the upside. On the downside, support might come at 11680-11700 levels and today expiry might happen between 11700-11800 level and if we break 11680 then we might test 11650 levels. So, there is no need to take any risk today and you can relax and observe the expiry moves. If you get a dip below 11680 and if Nifty holds 11650 then you can think of going long there with 11720-11750 as the target. 

Market Trade Setup 24th April #NIFTY

The third and the biggest phase of polling is done and we had good polling of 67.41% vs 2014 figure of 67.28% which means we have matched the Modi wave polling and all those who are saying that the polling is less and voters are unenthusiastic need to re-look at their words again. Practically 303 out of 543 seats have polled and the market now knows who is winning and who is not. So, let’s see where it goes from today. US markets closed positive with Dow Jones gaining 140 points but Asian markets are sulking a bit today in flat to negative territory. Hong Kong is down 50 points and Japan is absolutely flat.

Coming to domestics, the polling is over and the higher voter turnout this time indicates that Modi is in the driver’s seat and the higher voter turnout was seen across all states like UP, Kerala, West Bengal etc. Now the focus shifts to a 4th phase which will go to polls on 29th. Another news is the AAP-Congress alliance in Delhi and Haryana did not happen as yesterday was the last day of polls. This also might work in favour of BJP. Lastly, the SC notice to Rahul Gandhi on the Chor remark he made will also create some news. Away from politics, today is another important day for Q4 results with Bharti infratel, ICICI prulife, Indiabulls Housing, M&M Financials, Tata Elxsi and Ultra tech cement coming up with their Q4 results.

On the derivatives front, tomorrow is the monthly expiry for the April series and there are some interesting moves seen. So far we have seen 42.4% rollovers which is slightly higher and what is more important is a lot of FII buying that happened in Nifty Futures and that too for May futures when election results are due. That took the Nifty futures long exposure to 70% and last Thursday it was at 62%. This sudden jump should be seen carefully. n options the Nifty put-call ratio remained steady at 1.30 vs 1.35 seen at the beginning of the day. 11700 call added 11 lakh positions while 12000 call shed 3.9 lakh positions which makes 11700 the highest for this series. On the put side, 11500 put has the highest open interest followed by 11600 put.

What is the Nifty call for the day?

A mildly negative Asia means we are likely to open flat around 11580-11600 zone and this is a strong support zone. If 11570 is taken out then 11520-11550 will be tested. On the upside, 11700-11720 is a strong resistance difficult to overcome. You would have taken long positions yesterday in 11600-11620 mark and today they will give you profits. If the 50 point target is reached then you could exit that position. But I have another trade to suggest now. You can go for a long position in May futures today with 12000 as the target for the election day or the exit poll day. The target can be reached before also. This position can be different from the daily positions you take. There is a chance of 350-400 point profit for the next series and take these positions to benefit from the upmove, which is going to come.

Market Trade Setup 11th April #Nifty

Finally, the Election Mahotsav arrives. The 7 phase polling that we would see for the next 38 days is going to be breath taking with strategies and counter strategies by the ruling party and the opposition. All in all, we are going to see the most crucial election in the recent time, crucial than the one which happened in 2014, which incidentally was my first election and the first time I cast my vote. The global markets are not looking that positive as Dow closed flat last night and all Asian markets are in red especially the Hong Kong which is down 200 points and Japan down 150 points. Brent Crude is still above 71 dollars and that continues to be a big worry.

Coming to domestics, market movement today will completely depend on how the first phase goes today. Farm distress, jobs and national security are the major issues that we are facing in this election and the first phase today is mostly concentrated in South India. 44 out of 91 seats, which is roughly half of the seats going to polls are from South India, especially AP and Telangana. 60 out of the 91 seats are the rural seats and what rural south India thinks about Govt is important. As such BJP has very less stake in the south and out of these 44 seats in South BJP holds just 4 of them. But things are different in other 47 seats of North, Northeast and Western India. There out of 47 seats BJP holds 34 seats so it is extremely crucial that BJP should try to hold many of them. The big challenge is the 8 seats in UP where BJP holds all 8 of them. All these are from western UP and with SP-BSP-RLD combine, BJP is facing a united opposition.

On the derivatives front, as Nifty fell close to 90 points yesterday, on the slew of bad news for BJP starting with the Supreme court verdict, there was selling that happened in the Nifty futures market. The Nifty long positions which fell to 67% have now fallen to 63% at the end of the day. In the options market, however, the demand for the call continued and the Nifty put-call ratio fell to 1.33 from 1.42 mark seen at the beginning of the day. Today is the Nifty weekly expiry and if we look at the open interest positions, 11500 put has the highest open interest, compared to 11600 put yesterday and 11700 call has the highest open interest. Right now Nifty is at 11584 which is almost the mid point.

What is the Nifty call for the day?

A red Asia means we will also open in the flat zone around 11580-11600 mark and as the options positions indicate today could be a day of volatility where market can test 11500 mark and even might go to 11680 mark. Much of it depends on how the elections of the first phase go, especially in Uttar pradesh and Maharashtra. Yesterday, you would not have taken positions, considering the fall and the volatility that Nifty has shown. If you have not taken a position, its good and do not go for any fresh position now. But if you have ended up taking a position then all that you need to do is to hope that you get a sharp up move above 11650 mark so that you can exit that position. Today is election as well as expiry so its time to wait and watch. 

Market Trade Setup 10th April #NIFTY

Finally, there was a rally in the last hour yesterday much to the relief of many, who were doubting whether Nifty would cross 11600 or would settle down below that but somehow we managed to cross 11600 and went up all the way to 11685 levels and closed almost at the high point of the day at 11671. Globally, however, things are not looking that great. US markets corrected close to 200 points and this is on the worry that came from IMF which has cut the global growth forecast and that seems to be having a major impact across all markets. Added to this is the Trump tweet which talked about imposing trade sanctions, this time on European Union. Asia is also negative today mainly on the IMF growth cut with both Hong Kong and Japan showing 150 points cut each.

On the domestic front, the campaigning for the first phase of elections finally came to an end and a positive close was mainly due to the positive outlook given for NDA that it might come back to power. India Today was the last channel to come up with the forecast and they gave a figure of 263-283 seats for NDA and surprisingly in UP BJP might get 42 seats which was much better than 20 plus seats forecasted 2 months ago. BJP is also doing well in Maharashtra with 40 seats almost the same as what they got last time. The other news today is going to be the IIP and the CPI data that will be released for the month of Feb and March. CPI for March is expected to be around 3% and if it comes in that range it will be a good trigger to look at another rate cut in the June policy of RBI.

On the derivatives front, there has been some selling in the Futures market in the last 2 days which has brought the Nifty futures long positions to 67% from the highs of 71%. This is in a way good as now there are 1/3rd shorts in the system. The options also has seen some trimming of Put call ratio and the Nifty put-call ratio right now stands at 1.42 which is a good level considering that tomorrow is the weekly expiry. Yesterday 11600 put added 5.3 lakh positions and that established 11600 put at the highest open interest which means we have firm support at 11590 levels. On the call side, 11850 call added 6.4 lakh positions and 11800 call has the maximum open interest followed by 11850 call. So, Nifty now has the legs to go up to 11800 by tomorrow. The range is now 11600-11800 mark.

What is the Nifty call for the day?

The positions that you were holding for last 2-3 days finally would have got closed yesterday as Nifty went all the way crossing 11680 mark and that you would have made a 20-80 point profits depending on where you have taken positions. But what is important is that a futures trade is closed, which is very important for small traders. Today the IMF news will give a dip at the opening and Nifty might open around 11620-11650 mark and that also is the support zone. Any correction will bring it to 11590 and Nifty should find a support there. So, it is better to go long at around 11600-11630 mark with 11680-11700 as the target. You can otherwise keep a 50-70 point profit target which can be anytime this week

Market Trade Setup 8th April #Nifty

The crucial period of election finally begins. There was a pre-election rally for 4-5 weeks starting from the beginning of March on the news of possible victory for BJP. Now we have actually entered the 6 weeks of election period where at the end of every phase market will get some cues on the way things are going. Pre-election rally brought Nifty from 10800 to 11700 mark, which is a 900 point gain and will this 6 weeks add another 900 points to take it to the targeted 12500 mark needs to be seen. On the global front, things were flat on Friday with Dow Jones closing almost flat gaining 40 points. The good news coming in was the US jobs data which came better than expected figures and the impact will be shown today. Asia is green except Japan and Singapore which are in the mild red. Hong Kong is the best performing market with 150 point gain.

On the domestic front, the real election period starts this week with first phase polling happening on 11th April. But the more important news is the BJP manifesto which releases at 11 AM today and market will be carefully looking at it to see what would be BJP’s response to Congress promise of 72,000. If BJP doesn’t do anything that spoils the fiscal health but gives something to everyone, then we can see a big rally happening. In other news, this week also kick starts the crucial Q4 and annual results of companies and today is the starting day with Delta Corp coming with its Q4 numbers. The net sales are likely to be above 200 Cr and a PAT of 50 Cr plus. The bad news is from Brent Crude which crossed 70 dollars and now trading at 70.7 dollars. This could start putting pressure on India now.

On the derivatives front, this series is seeing an unusually high premium and this is bound to happen as weekly options were introduced which led to a spike in volumes and cost of holding also has gone up. Friday the Nifty futures premium surged to 90 points from 76 points as there was buying happening with the upward movement of Nifty. The overall long positions have now reached 71% and we are approaching a danger zone where there are fewer shorts and that could trigger a big fall on a slight correction as there are no shorts to be covered. On the options front, The Nifty put call ratio went up to 1.61 from 1.52. 11600 put added 14 lakh positions on Friday and now it has the highest open interest for this week’s expiry followed by 11500 put. On the call side, 11700 call added 3.5 lakh positions and it also has the highest open interest on call side followed by 12000 call. So, for this week’s expiry 11570-11760 are the markers on upside and downside. 

What is the Nifty call for the day?

A mixed Asia means we are also likely to open flat between 11650-11680 zone and till the manifesto comes out Nifty might not cross the 11680-11700 zone and market has kept 11700 and 12000 as the number one and number two in open interests. So, if there is positivity and this fundamental news of BJP manifesto breaks the 11760 barrier then we could start moving towards 11800 and above. But if that doesn’t happen then we might correct to 11600 zone and might find some support there. You already have a position taken around 11600-11630-11680 zone and wait for it to go to 11750 mark to exit the position. For today I suggest no trade and only wait for the position to reach a profitable position before going for new positions. 

Market Trade Setup 4th April #NIFTY

All time high achieved yesterday and that too for just 10 seconds. I think it is the shortest all time highs that is possible in any market. 11760 was the previous all time high and Nifty went to 11761 and then fell. The fall was more in the last one hour of trade primarily due to the sky met forecast on this year’s monsoon. The global markets were positive yesterday with Dow Jones going up for the 5th day and closed in mild green of 40 points. Asian markets are in green, except Hong Kong which is down by 40 points while Japan is up 60 points and all other markets on mild red. Brent Crude however did not go past 70 dollars and has corrected a bit to 69.3 dollars now and the Rupee is going strong and strengthened 32 paise and closed at 68.42 to dollars and now we have a realistic chance of Rupee going to 67 zone.

On the domestic front, the technicals played out in the morning as there was a profit taking that happened as soon as Nifty crossed 11760 zone. But what has triggered a bigger fall was the forecast from sky met for this year’s monsoon which said that monsoon this year will be below normal. Sky met forecast this year’s monsoon to be 93% of LPA which is a 7% deficit from the normal. June is expected to be the worst month with a deficit of 23%, July will have a deficit of 9%. June and July are the sowing months so this can have a major impact on the agricultural production this year. August is likely to be 2% excess while September is likely to be 1% deficit. There was a big correction post this news on the fear of a slow down induced by a bad year. Another news is the credit policy announcement and at 11.45 we will know whether its going to be 50 bps cut or 25 bps cut. 

On the derivatives front, yesterday saw the volumes dropping a bit compared to previous expiries and the turn over on the penultimate day to expiry was under 10 lakh crore at 9.8 lakh crore and we have to see how much we can expect today. In the futures market however the premium on Nifty is very high compared to the average and we have a 76 point premium on Nifty. The Nifty put call ratio in the options market however dropped to 1.42 from 1.52 from the beginning of the day. On put side yesterday there was a huge unwinding of positions and maximum unwinding was at 11700 put that saw 4.1 lakh positions unwinding and 11600 put saw next highest unwinding of 2.3 lakh positions. As a result 11500 put has the highest open interest today and 11600 put is closely behind. On the call side 11800 call added 8.4 lakh positions while 11750 call added 6.7 lakh contracts and we have 11800 call as the big resistance. 

What is the Nifty call for the day?

I had talked about Nifty falling to 11680 zone and a fresh position being initiated there. Yesterday Nifty fell much below that and its now at 11640 zone. If you have taken a long position between 11660-11680 you would be sitting on a minor loss. Today, we might have a good opening in 11660-11690 zone and immediately your positions will be in mild profits. There is a resistance coming in at 11760 which is the all time high and RBI credit policy at 11.45 will decide whether 11760 will be taken out on the upside and we will go to 11800-11810 zone. Otherwise if there is a disappointment we could correct to 11580 levels. So, it is better to have a target of 11750-11770 and exit the positions as soon as Nifty reaches there. This market is on its way to 12000 mark but its not going to be one way traffic. It will be a one step back and two step forward method to reach 12000 mark

Market Trade Setup 28th March #Nifty

The expiry day for the third series of the year is finally here. Unlike the last two series which saw close calls for bulls and bears, this series has been completely in the grip of bulls having gained 653 points so far which is the highest in the last 8 months. Today’s expiry has a lot of global and local cues to worry about and the primary of them is the yield inversion where the 10 year US bond fell to 2.35% which is the lowest since 2017 and now the talk of slow down and recession is growing louder. The result was the US closed in mild red losing more than 30 points and Asian markets are also in red with Japan losing more than 300 points and other markets also in mild red.

On the domestic front, yesterday was an action-packed day with PM Modi putting up a tweet that he is going to make an important announcement at 12 noon and the whole nation waited with bated breath. Finally, the announcement was about India being the 4th country in the World to test the Anti Satellite missile at lower orbits of as low as 300kms. This could protect us from any spying that enemy nations can do on our data and communications and also we can shoot any satellite spying on us. This is indeed a great achievement but what it ended up opposition complaining to EC about the violation of poll conduct. EC has taken it up for probing. So, politics dominating the space today than economics.
Coming to derivatives, today is the expiry day and we had January series going to bulls with 60 points and February going to bears with 40 points and till last day we were not able to predict the winner. But this series is firmly in bulls grip with 653 points and yesterday we have seen a record turnover for the penultimate day of expiry. The turnover was at 17.2 lakh crore and now we have to see whether we will hit the 20 lakh crore turnover or not. The Nifty put-call ratio fell to 1.49 from 1.64 as there was a lot of put unwinding. 11200 puts saw 6.1 lakh unwinding, while 11300 put saw 4.7 lakh, 11000 put 4.1 lakh and 11400 put 3.5 lakh. The highest unwinding on put side happened at 11500 put which saw 7.4 lakh positions disappearing.
All this have left the put side or support side very confused and 11000 put has maximum open interest followed by 11400 put. So, we can conclude that 11400 is a support that will hold for today. On the call side, 11600 call added 11.2 lakh positions followed by 11450 call that added 6.5 lakh positions and 11550 call added 5.4 lakh positions. 11600 call has the highest open interest followed by 11500. So, 11600 should be achievable if Nifty doesn’t correct today. If we take a hint from 4th April weekly expiry 11500 call has the highest open interest and very close to it is 11600 call. So, options present a very confused picture now.
What is the Nifty call for the day?

We will have a flat opening around 11450-11470 zone and then the first resistance will come at 11520 levels and if Nifty is able to take it effortlessly then we can go all the way upto 11580-11600 mark intraday. On the downside 11410 is strong support. So, my feeling is today if the open remains positive and Nifty doesn’t fall much then we can go for a long position in April series. Am saying April only for safety reasons. But one thing we need to remember is, last two months expiry did present some volatility and today also you might see it and don’t be surprised if Nifty goes to 11580 if it manages to cross 11520 in the first one hour. The target for your long position taken below 11500 mark should be 11550-11580 mark, any time in the next 3-4 session starting from today.

Market Trade Setup 18th March #NIFTY

The second half of the series starts off today on a very positive note where the first half has seen more than 400 points gain in the Nifty where it jumped from 10815 level to 11430 level. We need to wait and see how the second half pans out. If 11500 is the cap for Nifty then we just have under 100 points to trade in the next 9 trading sessions and Nifty might be in a flat zone or might correct itself a bit. Globally speaking Friday closed very positive₹ for Dow Jones which closed 140 points higher while all the Asian markets today are in the green with Hong Kong and Japan both up 150 points each.

On the domestic front, on Saturday we had the Trade deficit data for February coming in and it is the best number in last 17 months, which is mainly on the drop in imports and rise in exports. The deficit number is at 9.6 billion dollars vs 14.7 billion seen in January and 12.3 billion seen in the same month last year. This is because of exports going up to 26.6 billion and imports declining to 36.2 billion. The drop in imports is mainly because of the drop in gold imports and falling crude oil prices. In other news dollar index is softening more and today we might see Rupee opening below 69 and I had indicated that in my Friday post itself. Today Rupee could even touch 68.50 levels. Brent Crude has also stabilized and is trading at 67 dollars.

On the derivatives front, the long positions in Futures are at 61% now and with every passing day, the long positions are going up. This presents a case for a sudden fall in Nifty as there are not enough shorts in the system to prevent the fall. In the options market also the put-call ratio has also gone up to 1.77 from 1.71 seen at the opening on Friday. This week expiry is on Wednesday so we just have 2 trading days to expiry day. 11400 put has the highest open interest of 12.7 lakh positions out of which 9.7 lakh came on Friday. On the call side, 11600 now has emerged as the strike with the highest open interest with 8.4 lakh positions. 11500 is close behind with 8.2 lakh positions. For the monthly expiry, however, 11000 put and 11500 call continue to have the highest open interest.

What is the Nifty call for the day?

A green Asia means we will also open a bit higher around 11450-11480 zone and the first resistance will come at 11520-11540 level. On the downside 11380-11410 will be a strong support zone. This weekly expiry data markers show that Nifty has the potential to go up to 11610 this series itself but I feel that 11520 is a zone that will be a bit difficult to cross. I suggest taking a long position at the open itself today between 11450-11480 mark with 11510-11530 as the target. Take this position as soon as Nifty is in that range and don’t wait for the customary 1 hour. If the market is bullish you might not get an opportunity. If Nifty drops to 11380 levels also after you took the position, hold on and wait for the next two days.

Market Trade Setup 15th March #NIFTY

Market Setup 15th March

The Weekend is here and from Monday we will enter into the second half of the March series. Yesterday went exactly as predicted in the range of 10340-10370 at 10343. After a flat series we are now looking at a shorter expiry week of just 4 days. Yes, this week’s expiry will be on Wednesday 20th March as 21st is Holi. This is the first ever 4-day week series of Nifty and we need to see how it progresses. On the global front however, things look stable as Dow closed absolutely flat yesterday and today morning all the Asian markets are trading in deep green. China is up almost 1%, Hong Kong and Japan are up 200 points each. 

Coming to domestics, India has gone into the election mode as campaigning is picking up and blame game is going on in a big way. As of now the market is predicting a win for BJP and that is keeping it in the green territory. Rupee was the star of yesterday as it staged a big recovery to close at 69.35. Now we are seeing the real possibility of Rupee going below 69 and that means even currency markets are anticipating a Modi win. The only other worry is the 10-year bond yield which still continues to be at 7.36% for a bond issued at 7.26%. Brent Crude also corrected a bit and now trading at 67.2 dollars.

On the derivatives front, one thing we need to observe is although Nifty remained absolutely flat yesterday, Nifty futures premium went up from 24 points at the beginning of the day to 38 points at the end of the day and the overall long positions went up from 59% to 60% which is the highest this year. Two days ago I had made an observation that this series the turnover on expiry day could touch 20 lakh crore and Nifty almost came closer to that. Nifty’s 14th March weekly expiry turnover was at 19.97 Crore and 18.85 lakh Crore came from the Index options itself and the total volume was at 3.19 lakh and the put call ratio corrected to 1.72 from 1.81.

What to expect from 20th March weekly series?

This series is starting with 11300 put having the highest open interest of 7 lakh positions followed by 11200 put at 6.5 lakh positions. So, Nifty can find its first strong support at 11260 and if that is broken then we will go to 11180 this series. Don’t expect Nifty to go below that unless there is a big fundamental. On the call side, 11400 call has the highest open interest at 8.6 lakh positions followed by 11500 call at 6 lakh positions. So, a strong resistance will come at 11440-11460 levels on the upside and if that is taken out then we might touch 11500-11520 zone this series itself. So, let’s see how it plays out.

What is the Nifty call for the day?

We had a very flat day yesterday and you didn’t have any opportunity to trade. Today also we will start flat to positive between 10340-10370 range and today can be a down day as the series markers indicate more downside. It is indicating downside because we are closer to resistance and there could be some selling if Nifty goes to 10380-10400 zone in the morning. There could be some profit taking also at this stage. So, a correction to 10280-10300 is a possibility. So, I suggest you to avoid trading today and since it’s a weekend to the risk is a bit high. So, stay out for today and see where Nifty goes.