Decoding Options Data: Unveiling NIFTY Index Trends

Entering the weekly Options expiry day, a meticulous analysis of Options data offers valuable insights into the potential trajectory of the headline NIFTY Index. Intriguingly, the focal point of intraday activity is the 19400 strikes.

Here, a notable increase of 82.85 lakh shares in PUT Open Interest (OI) is observed, concurrent with a substantial unwinding of Call OI by 54.15 lakh shares. This dynamic suggests a prevailing sentiment among a significant cohort of market participants, indicating a collective belief in the protective potential of the 19400 mark on the impending expiry day.

Examining historical OI for the 24AUG expiry, it becomes evident that the highest Call OI accumulation gravitates around the 19500 levels, while the maximum PUT OI is concentrated at 19300, closely pursued by the 19400 level where the second-highest PUT OI is placed. This intricate pattern implies market participants anticipate 19500 to serve as a robust resistance in the immediate short term. Conversely, the bracket of 19300-19400 is projected to offer substantial support.

This analysis effectively delineates a relatively narrow projected range of 200 points for the NIFTY in the near term. The emergence of a directional bias hinges upon breaching the thresholds at either 19500 on the upside or 19300 on the downside.

For traders, there exists an opportunity to harness these insights by strategically positioning themselves one strike apart from these pivotal levels. Crafting a short strangle strategy can be a prudent approach, aimed at capitalizing on the premiums presented by Options, as long as the index remains confined within this anticipated range. It’s important to note that this interpretation presents a perspective and not prescriptive advice, empowering traders with informed choices aligned with the prevailing market dynamics.

Milan Vaishnav, CMT, MSTA

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