Writing in 10400-10500 call options restricting upside: Angel Broking

Views of Ms. Sneha Seth (Derivative Analyst, Angel Broking):

"The benchmark index started off today's session on a slightly negative note but in the midst recovered to reclaim 10400 mark. However, couldn't sustain as strong selling pressure at higher levels dragged index lower to finally end the session with a cut of 29 points.

If we look at Nifty options activity, clearly writing in 10400-10500 call options restricted the upside in index. While, writers of 10200-10400 put options ran for shelter seeing the selling pressure during latter half today. However, maximum concentration of open interest for November series remains intact in 10500 call and for puts is placed at 10000 followed by 10300 strike.

In the recent upmove, we hardly saw any meaningful OI activity as far as Nifty futures are concerned. If we glance at FIIs net activity for entire November series, they formed good amount of shorts in index and stock futures along with decent long positions in index put options. At the same time, they continue curbing liquidity through cash market. Thus, the above data hints market has limited upside; while, writing in 10400-10500 call options suggest a strong hurdle around 10400 mark."

Source : Equity Bulls

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