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Equity Futures: Traders sell 18200 call options as Nifty 50 sheds 1%

Informist, Friday, May 5, 2023

 

By Ananya Grover

 

MUMBAI – Traders wrote off call options of 18100-18200 levels as the Nifty 50 fell 1% today due to losses in shares of heavyweights Housing Development Finance Corp and HDFC Bank. Analysts believe the index is still seeing hindrance at the crucial 18200 level, which it topped in the previous session.

 

Today's fall in the spot market was also due to the absence of institutional investors on account of Buddha Purnima. The Nifty 50 index ended 1.02% lower at 18069 points. Despite this fall, the index ended above 18066.70 points, the lowest level of Thursday, said Viraj Vyas, technical and derivative analyst at Ashika Stock Broking. 

 

He added that sustaining above 18200 level still remains a near-term hurdle for the index. Options contracts of this strike saw call writing today with premium falling 66.5% to 43 rupees. However, the open interest still was the highest at 12 mln, indicating that investors expect a recovery.

 

Similarly, open interest at 18100 strike also rose by over 5.7 mln, while the premium declined 58.4% to 83 rupees.

 

Another contract which attracted investors' attention today on the call side was of 19100 strike, whose open interest jumped by 9.77 mln. Vyas explained that this spike might have occurred as put writers panicked due to the gap-down opening, and they wanted to take advantage of span-margin benefit.

 

On the put side too, maximum open interest was at 18200 level with premium rising over 146.5% to 149.50 rupees. Traders also added long positions at 17900-18100 levels, whose premiums rose over 150%.

 

Volatility index India VIX ended up 4.8% at 12.3 level today. Vyas said this spike is concerning and indicates that call writers are taking control.

 

Prashanth Tapse, senior vice president of research at Mehta Equities expects a volatile session on Monday with Nifty 50’s major hurdles seen at 18300, while the support to watch out will be at 17971 mark.

 

The May futures contract of the Nifty 50 closed at a premium of 61.10 points to the spot index today. Open interest in the contract was 6.8% higher at 10.37 mln, as per provisional data.

 

–Nifty 50 May closed at 18130.10, down 164.55 points; 61.10-point premium to spot index

–Nifty 50 Jun closed at 18213.00, down 145.95 points; 144-point premium to spot index

–Nifty 50 Jul closed at 18266.15, down 160.35 points; 197.15-point premium to spot index

 

HDFC Bank, Housing Development Finance Corp, ICICI Bank, and Federal Bank were among the most-actively traded underlying stocks today.  End

 

Edited by Vandana Hingorani

 

 

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