Nifty July :
The chart shows that through the series the region of 5570 evoked the maximum interest amongst traders this July and maximum volumes were exchanged there.
This makes 5570 the fairest value for price or the region which holds max value for traders.In an ideal scenario the expiry should happen at this price or near this price.The upper level is represented by a VWAP at 5617. This region and above represents the point at which the expiry should not happen.Generally a Point of control below vwap means a seller dominated through the series and the expiry should favor the seller.
Bank Nifty July :
Whilst looking at the BN monthly profile we see price stretched or too far removed from profile lows or value. This means that the current lot of sellers in BN are not enjoying great value and the market can easily do a short covering number on them.
Value low is at 11176 whereas the best price for the series was at 11250 which is where the vwap and the point of control converge.
The most probable scenario would be for price to migrate closer to the best value tomorrow.
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6 comments:
shai,rm
i am back to evening-option-class ;-)
few queries:
1).tomorrow, most prob. mkt will have two side moves before expiring around 5570 as u say. now i have this 5500pe + 5600ce combo at 23 rs. - suppose mkt goes to 5600+ - upto what price max. the ce can go? at present both are trading around 10 rs. similarly if the mkt goes below 5500 - upto what price the pe can go?
2). if in the end both the options are going to be zero and if all the options are going to be zero - why wouldn't every one just short the options? i know, this is a very silly question - but want to understand....or is it possible that if we expire at 5650, 5600ce is at rs. 50 at 3.30 or at 5450 expiry - the 5550 pe is at rs. 50?
3). 5400 pe was 60 paise - that means in 30rs. 1 lot of nf. now if i buy 300 lots - it would cost me rs. 9000. suppose mkt falls heavily today and expires at 5450 or below tom. - how much max. can this pe go upto?
Hi Janak
1. If the market keeps grinding between 5530-5570, the premiums will keep on reducing. A sharp move in the morning to 5600 or 5500 may fetch a good premium. But in the afternoon only crossing of strike 5500 or 5600 will get you something to smile about.
2. All the options are not going to be zero. All CE below expiry price and all PE above expiry will be in the money and writers will have to shell out greenbacks to the buyers for those. :)
3. Even if the market expires at 5400, the 5400PE will have nil value. Only an expiry below 5400 will bring the money on the table.
thanks rm - "If the market keeps grinding between 5530-5570"- when was the last time mkt kept in a narrow range? :-) :-) so this possibility is ruled out? now at the moment, EU mkt has got a dracula in their bourses - everywhere red....assuming that we open lower and sharply move below 5500.....ok, one thing, at-least once in the day, the mkt will go higher/lower 5600/5500?
but yeah - u r right, in the morning when there is a sharp move and if i am in profit...."patli gali se...." :-)
* when was the last time mkt kept in a narrow range on the expiry day? :-) :-)*
@Janak
Last time it happened was last expiry when NF kept simmering between 5637 and 5603 till 1500 Hrs. :)
NF 30JUN
really rm? hmmmm.....then i will have to invoke bears and bulls both to create a havoc....even if it is just for a while.....btw, looking at the eu market down from 1 to 2% and us open at 1% down - now hopes are high that we might open below 5500.......mera kya hoga rm? :-) 5500pe- bacha lena.....
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