Hindalco 380 PE Option gains twofold; will 50-DMA come to rescue?

Indian markets logged gains for four consecutive trading sessions on Tuesday while on Wednesday, profit booking was witnessed. Currently, Nifty is down by nearly half a per cent and is hovering around the 15,800 mark.   

Barring Nifty FMCG, all other sectoral indices were trading in red, led by Nifty Metal as it’s down by more than 2 per cent. Metal stocks came under the hammer after reports suggested that China has ordered state firms to curb overseas commodities exposure and it may release copper, zinc, aluminium, state reserves soon.   

Hindalco Industries is one such stock, which has been adversely impacted by this report. The stock has witnessed an addition of more than 16 per cent in the open interest and it is down by 2.7 per cent. Theoretically, if the prices plunge and the open interest goes up, then it’s a sign of short built-up.   

Moreover, at-the-money (ATM) 380 Put option strike has more than doubled or in today’s session. Furthermore, 375, 370, 365, 360, 350 & 340 Put options strike too have twofold on Wednesday.   

The 390 Call option strike has seen a massive addition in the open interest as more than 7.5 lakh shares have been added since morning. Furthermore, 390 Put options have seen the unwinding of over 5 lakh shares in the open interest. The maximum open interest on the Put option side is seen at 380 strike price and the stock is very close to this level. Moreover, the 50-DMA is placed in this region while the stock has not slipped below its 50-DMA since February 2, 2021.