Nifty 50 Nov Expiry: A Sweet Play for Options Sellers!

  • Stock Market Analysis

The Nifty 50 index has been in a correction mode for the last few sessions. Since the last 4 days (including today) the index has been making a lower low and lower high formation, which is clearly reflecting a downtrend. Although it’s difficult to say whether the top has been made or not but the correction phase after a strong rally is evident.

The index topped out (at least for now) at 18,442, making the 18,450 a very important resistance zone in the near term. For the current monthly expiry, call option sellers above this strike price seem to be making good money by Thursday. As strikes in the multiple of 50 are not traded much, the 18,400 and 18,500 CEs have accumulated an open interest (OI) of 2.24 lakh and 1.68 lakh contracts, respectively. Interestingly, the highest OI is present at 18,300 CE, at around 2.42 lakh contracts which is showing the aggressiveness of the bulls. 

Looking at the confidence of the bulls and the downtrend of the market, it seems unlikely that a strong rally could materialize in the next few days to surprise the bulls. To further support the bullish view, the India VIX closed at 14.8, up 2.85% for the day. This is quite a low value, especially considering the upper end of the range for the year, which even soared to around 34 in March 2022. A low VIX denotes that market participants are not expecting much volatility in the near future. So even if a counter-trend rally comes, it is expected to be subtle and gradual, not a ferocious rally.

On the other hand, the downside seems a bit open but as the market has already fallen 244 points in the last 4 days, the scope of a further fall that breaks an important 18,000-mark is not expected. The level of 18,000 is a very important support zone from many perspectives. First, it's a psychological zone as many rounded-off figures such as 18,000 holds high importance.  

Second, the market has taken support here several times on its way up, during the first 10 days of November 2022. If the index falls again to this level, the buying would kick in again, restricting the index to break below this crucial support.

Third, the open interest at 18,000 PE is the highest, at 1.39 lakh contracts. However, a room to 18,000 is open and the current distance of around 160 points (from today’s closing) could easily be traveled by the index.

So, for November 2022 expiry, I am expecting the Nifty 50 range to be 18,450 - 18,000.

 

Disclaimer: I hold Nifty 50 options in my portfolio.

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  • Arjun Jagadale @Arjun Jagadale
    Pl give me some calls sir
    Like 0
  • Sunil Rathod @Sunil Rathod
    18250 call
    Like 0
  • debasis Biswas @debasis Biswas
    nifty 50.options...but ce or pe
    Like 4
    • Abbas Shakir @Abbas Shakir
      mature trader like him doesn't carry naked CE or PE
      Like 1
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      100
  • Trilok Chandra @Trilok Chandra
    Tomorrow level 18250
    Like 2
  • Debasish Paul @Debasish Paul
    Nifty 50 tomorrow may touch 18000 be alert
    Like 5
  • selvakumar Thangavel @selvakumar Thangavel
    Great information. True information
    Like 3
  • Harshal Ahire @Harshal Ahire
    Nice artical Aayush!
    Like 2

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