Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Nifty Open Interest Lookup and Crashing Junk Bond

1 min read

Markets haven’t said anything negative in the last four trading sessions despite two worrying factors. After FED increased their Federal fund rate by 25 bps there was a massive rally in global markets but when comes to Indian markets we had witnessed a initial resistance near to 7800 levels with massive fall in India VIX numbers. And 7500PE writers more possibly by some smart bunch of retail traders who built highest open interest among Nifty option strikes had started covering open positions (profit booking) and later 7400PE writers also joined similar sort of unwinding despite rising markets in the noon session.

Nifty Options Open Interest
Open Interest

 

What are the implications?

The smart money comes in and the smart money comes out. And now the scenario is – the one who believed that 7500 is the key support zone for Nifty is no more! Does this imply crash in the market? Not necessarily! But without option writers support markets cant keep on rallying relentlessly. Despite of initial bearishness market started rallying in the noon session with IndiaVIX falling down to 14.09 and the 7400PE and 7500PE writers gone even more aggressive in unwinding their open positions (shorting 7400PE and 7500PE options). If the Option writers are covering their positions at 7400PE and 7500PE (smart money) then possibly it indicate likely increasing volatility in the near future. Be ready for crazy markets ever before!

Change in Nifty Options Open Interest
Change in Open Interest

What about the Junk Bond Crashing?

US Junk bonds are witnessing extreme carnage. Normally, stocks and junk bonds track one another very closely, but just like before the 2008 crash, they have become decoupled in recent months. Anyone that even has an elementary understanding of the financial world knows that this cannot continue indefinitely. And when they start converging once again, the movement could be quite violent. – Source TheEconomicCollapseBlog

JNK

Sentimental Update

Nifty Futures Daily Sentiment holds positive so far and weekly sentiment holds negative for the last two weeks and only if markets sustainable 7800 on weekly basis with option writers at lower levels could bring more upside in the near future. Otherwise what the option writers done after FED announcement is they had just opened the flood gates towards the lower Nifty levels.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

[Option Strategy] Hedged Futures with OTM Options to Save…

These days for Retail Traders trading in futures trading requires a huge margin. Approximately 1.65 Lakh per lot is required to carrying forward future...
Rajandran R
1 min read

How to Send Automated Option Orders from Excel Sheet

In this online webinar we will be discussing how to send automated orders using Microsoft Excelsheet and How to Get realtime data into Excel.
Rajandran R
16 sec read

Bearish Option Strategy: Nifty Hedged Puts – Nov 2020…

Structurally Nov 2020 series is closing the long pending island gap reversal which is an investing reference. However, emotions are running high during the...
Rajandran R
42 sec read

One Reply to “Nifty Open Interest Lookup and Crashing Junk Bond”

  1. Hi Rajandran,

    Sorry to post this here in this thread. Does the ‘Directionless and Riskfree FNO Trading Strategy’ posted in 2009 still work for NIFTY at current levels or in any level? Would like to know if this strategy is fool proof and the loss is always minimum at 0.07%.. Thank you
    =====================================================

    Buy 5 Lots of OCT 5200 CALL : 66.60
    Buy 5 Lots of OCT 4800 PUT : 92.00
    SELL 5 Lots of NOV 5000 CALL : 220.60
    SELL 4 Lots of NOV 4800 PUT : 155
    Buy 1 Lot of Nifty Future at CMP: 4967

    Position Will be Closed on or Before OCT,2009 Expiry

    Maximum Loss Risk Involved in the trade : 0.07% i.e Rs 250
    Maximum Profit Potential : Infinity
    Return if Nifty remains unchanged : 6.74% i.e Rs 23,311

    During OCT Expiry

    If Nifty closes at 4300 – Profit Rs 820×50
    If Nifty closes at 4400 – Profit Rs 802×50
    If Nifty closes at 4500 – Profit Rs 761×50
    If Nifty closes at 4600 – Profit Rs 680×50
    If Nifty closes at 4700 – Profit Rs 551×50
    If Nifty closes at 4800 – Profit Rs 325×50
    If Nifty closes at 4900 – Profit Rs 460×50
    If Nifty closes at 5000 – Profit Rs 447×50
    If Nifty closes at 5100 – Profit Rs 270×50
    If Nifty closes at 5200 – Loss Rs -0.09×50
    If Nifty closes at 5300 – Profit Rs 144×50
    If Nifty closes at 5400 – Profit Rs 263×50
    If Nifty closes at 5500 – Profit Rs 370×50
    If Nifty closes at 5600 – Profit Rs 471×50
    If Nifty closes at 5700 – Profit Rs 567×50
    If Nifty closes at 5800 – Profit Rs 672×50

    All the above values are approx figures

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More