Market watch: What does the F&O market suggest about todays trade?

The Nifty 50 put call ratio closed at 0.55 after yesterday’s trading activity.

Domestic equity market opened on a positive note in yesterday’s trade, however, soon it gave up all the early gains and saw a volatile trading session. Finally, frontline indices such as Nifty and Sensex closed in the red. Nevertheless, broader markets like Nifty Midcap saw a positive closing. There is concern looming large about the spread of financial contagion from China’s Evergrande Group’s debt crisis and US Fed decision on the future course of monetary policy. 

F&O market activity for the weekly expiry on November 3, 2021, shows 18,000 will now act as strong resistance. The highest call option open interest (1,90,549) stood at this strike price. It shed 64552 contracts in yesterday’s trade which shows that call writers are nearly sure that the market will close below this level in today’s trade. The next highest call option open interest stands at 18,200 where total open interest stood at 1,38,200. Almost 40,000 open interest was added at a strike price of 18,200. 

In terms of put activity that will give a sense of support, the highest put writing was seen at a strike price of 17500 (74,680 contracts added on November 02), followed by 17,700 (68,987 contracts added on November 01), while there was put unwinding at strike price 16800 (20554 contracts shed), followed by 17,800 (15,821 contracts shed). 

Highest total put open interest (74,680) stood at a strike price of 17,500. This is followed by a strike price of 17,700, which saw a total put option open interest of 68,987 contracts. 

Following table shows the difference between call and put options at strike price near to the max pain of 17900. 

The Nifty 50 put call ratio closed at 0.55 after yesterday’s trading activity. It is worse than the 0.72 that we saw when we started yesterday’s trading. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish. 

Following table shows the participant wise action of key players on the index options front.