Hello Friend, Hope you are doing good in this highly volatile market. In my last weekly analysis and option strategy post, I shared that sentiments are weak because of domestic and global concerns.
That’s the reason even after a higher rate cut, the market is not cheering. Selling by FIIs is the primary concern. Valuations are also high, but we saw massive selling by FIIs in the last few weeks.
On Thursday, we saw some excellent recovery from lower levels after we got the news that the government is planning to give some relief to FIIs in tax, But i don’t think that this downside movement will stop here.
Although on charts Nifty and BankNifty both are taking support from their reversal zone but 200 DSMA is the majot resistance for now. A breakout from 200 DSMA will only lead to some upside relly.
Nifty Chart this week:
You can see that nifty is taking some support from 50-61.8% retracement zone,which is a very strong reversal zone as per my experiance. Nifty always give respect this zone and same i shared on my twitter handle that we may get some recovery from here.
Tax relife news and reversal zone both came together and we saw some good recovery from lower levels on Thrusday.
Now 200 DSMA is acting as a strong resistance level which need to break for a continous upside jouney. So 11175 – 10800 is the range we need to keep on radar. A breakout or breakdown will lead to forther levels.
Open Interest Analysis:
Based on option chain data, the highest Open interest stands at 11100 CE & 11000 PE, followed by 11200 CE & 10900 PE. PCR of all strikes is 0.98, which is a neutral zone. PCR at 11000 stands at 2.65, which is acting as an immediate support level, PCR at 11200 stands at 0.12, which is acting as a resistance level. Equally, substantial indicator Option Pain is at 11000, indicating weekly expiry at 11050. A shift in option pain will provide further levels.
We saw a substantial Open interest buildup in PUT side, which indicates that the market is trying to take some support around 11000-10800 levels.
As per the Option chain data, Resistance levels are 11100 & 11200, and Support levels are 11000 & 10900. So the expected range based on current data should be 11200 – 10900.
The trend is still bearish, so Need to track closely for any further shift in range as per option chain analysis.
Weekly Option strategy: Iron Condor
Possible adjustments: breakout from 11250 shift Put Spread to 100 points up. Breakdown from 10975, shift call spread to 100 points lower levels.
Bank Nifty Chart this week:
I shared on twitter that BankNifty is taking support in its reversal zone. I follow this Fibonacci tool from my starting days, and it always gives me a decent result.
50% – 61.8% zone is act as a reversal zone. Mostly we get a reversal from this zone. How big or small is the reversal that’s a different thing, but Bank Nifty always respect this zone. And the same thing we saw this time too.
Two critical levels on the Upper side, 28400(which is a 200 DSMA) and 28900(38.2% retracement level) we need to keep on the radar. A breakout from these levels will only give some upside relly in Banknifty.
On the lower side, 27100 will act as a strong support level. A breakdown will lead to more downside levels. The overall trend is still bearish, so any long position from this level is not advisable.
BankNifty Open Interest Analysis:
Based on option chain data, the highest open interest stands at 28500 CE & 28000 PE followed by 2900 CE & 28200 PE. PCR of all strikes stands at 0.70, which is a neutral zone. PCR at 28200 stands at 6.1, which is acting an immediate support zone. PCR at 28500 stands at 0.39, which is acting as an immediate resistance zone. Option pain stands at 28400, giving us expiry level. Keep tracking this option pain level. A shift in option pain will provide a new standard for expiry.
Banknifty Weekly Option Strategy: Iron Butterfly
Adjustments not required for this strategy. Just book loss and close this strategy once it breaches break-even points. If you still want to do some adjustments just shift Call spread to 200 points down after a breakdown from 28775. Keep put spread as it is. Same thing you can do with put spread after a successful breakout from 28226.
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8+ Years working as a derivative trader, Option Writer, Blogger, Trader by passion, Keen Follower of Indian share market