Weekly F&O expiry: How to trade Nifty, Bank Nifty on expiry day? Trade setup, likely trading range, outlook

Bank Nifty, Nifty 50, stock market, India VIX, derivativesBank Nifty has fallen nearly 2 per cent so far this week and shut shop at 34,415.45 on Tuesday

On weekly F&O expiry day, Nifty is likely to see a positive opening and trade in a range of 15,550-15,750. The 34,400 level will act as an important level in Bank Nifty on Thursday, and the overall trading range is expected to be between 34,000-35,000, said analysts. The Nifty 50 index lost 1.5 per cent in the last two days, and in intraday deals on Tuesday, it gave up the 15,600 support level, however, recovering from the lows it closed at 15,632. Bank Nifty has fallen nearly 2 per cent so far this week and shut shop at 34,415.45 on Tuesday. Ahead of weekly options expiry, Indian stock markets remained closed on Wednesday, on account of Eid al-Adha. India VIX, the volatility gauge, spiked 4.14 per cent to 13.21 levels on Tuesday.

On Nifty options, the maximum Call OI is at 15,800 strike with 78,095 contracts, followed by 15,700 strike price. While maximum Put OI is at 15,500, followed by 15,600. Call writing was seen at 15,700 and 15,650 strikes, while Put writing was seen at 15,500, then 15,400 level strikes. Call unwinding was at 16,500 and 16,000 strikes and put unwinding was seen at 15,700. For Bank Nifty options, the highest open interest on the call side in the weekly expiry is at 36,000, followed by 37,000 strike; while the highest OI on the put side is at 33,500-34,500 strike.

Rajesh Palviya, Vice President — Research (Head Technical & Derivatives), Axis Securities

Nifty has witnessed Short Build Up with a price cut of -0.73% and increase in OI of 3.71 lakh shares on Tuesday, while in Bank Nifty also there has been Short Build Up with price cut of -1.94% & OI addition of 1.77 lakh shares. The sentiment indicator PC Ratio (Nifty) is currently trading at 0.81, well below the median line, indicating neutral-to-positive bias. Nifty highest OI on the CALL side in the weekly expiry scheduled on 22 July 2021 is at 15,800 and 15,700 strikes wherein writing of 39.67 lakh shares was witnessed at 15,700 strike and 17.91 lakh shares of writing was seen at 15,650 strike indicating strong resistance zone at 15,700, while on the PUT side highest OI is at 15,500 and 15,600 strikes; wherein writing of 6.41 lakh and 6.56 lakh shares was seen at 15,500 and 15,400 strikes, respectively, indicating a strong support zone. So, the most probable range for the weekly expiry is likely to be between 15,750 to 15,550

In Bank Nifty the highest OI on the CALL side in the weekly expiry is at 36,000, 35,000 and 35,500 strike; while on the PUT side highest OI is at 33,500, 34,500 and 34,000 strike, with 34,400 acting as a pivotal level for this weekly expiry as there has been addition of 3.11 lakh shares on CALL side and 1.75 lakh addition on PUT side, suggesting that any sustain move on either side of this level will decide the trend in Bank Nifty. While on the writing front 34500, 34600 and 34700 strike call has seen writing of 14.22 lakh, 7.68 lakh and 7.34 lakh shares, respectively, followed by 33,500 and 34,100 put writing, indicating a strong support zone; overall range for Bank Nifty is likely to be between 35,000 to 34,000.

Sameet Chavan, Chief Analyst – Technical & Derivatives, Angel Broking

Post the weak start, the indices corrected sharply and it continued that on Tuesday as well. The banking space was the major culprit in dragging benchmark indices lower, coupled with the overall sentiments. Infact, short formations were also seen in the Bank Nifty in the derivatives segment. FII’s sold equities aggressively in the cash segment and also unwound longs in the index futures segment.

In the options segment, call writers were quite active and sold 15,700-15,900 calls. The highest open interest in the weekly series is placed at 15,800 call and 15,500 put options. The Nifty PCR-OI plunged below 1 which indicates the market nearing the oversold zone. India VIX has also spiked a bit from multi-year lows, but it is still not much high to worry about. A lot will depend on how the global market moves given the fact we have a market holiday ahead of the weekly expiry.

Traders are advised to avoid aggressive positions for this weekly expiry, but one can look for a contra trade and buy a monthly expiry call option if Nifty enters the support zone of 15,500-15,450. For Bank Nifty, this support zone lies in the range of 34,200-33,900 where some punts can be taken.

Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services

Markets will head into weekly options expiry with a weaker setup. Tuesday saw heavy call writing at 15,700 which also saw some Put unwinding as well. However, 15,800 still has the highest Call OI concentration on a closing basis. Nifty may see a positive opening and witness some technical pullback, however, it will face stiff resistance at the 15,700-15,800 area. On the lower side, it has support at 15,500.

Bank Nifty also saw high call writing at 34,500 levels. Unless, if there is a pullback and Bank Nifty opens above this point, it may face some struggle at this level. However, maximum Call OI concentration on Bank Nifty is at 35,000 which is a major resistance point even if a technical pullback occurs. On the lower side, it has support at 34,000 levels given the PUT OI as seen in the weekly options data.

Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities

Huge call writing is lined up between 15700 and 15800, However, the Put writing is lined up at 15600 and 15500. If we consider the PCR then it is at the lowest levels of the expiry, which is an indication of the oversold activity.

The Strategy

In case the market opens down around 15550, then it would be advisable to buy Call options for the 15500 strike between Rs 170-180. Keep a final stop loss at Rs 100 for the target of Rs 270-300. Buying Put options is advisable if the Nifty opens higher around 15750 levels.

Buying Call options is advisable, however, for that, we need an opening or intraday testing of the Bank Nifty to 34,200-34,100 levels (as per spot basis). Buy call options of the strike 34,000 between Rs 250-300 levels with a stop loss at Rs 100. In case the Bank Nifty is opening higher, then we should be the buyer in the put options of the strike 35,000. However, for that, we need an opening of the Bank Nifty around 34,700.

(The recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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