Fear among investors growing? October series F&O rollover less than 3-month average

The earlier three consecutive series noticed constructive motion, earlier than the September series slipped following a worldwide sell-off.

September by-product series ended 6.52% decrease on expiry as volatility surged, wiping out features made within the earlier series. With this, a decrease variety of rollovers have been witnessed to the October series, at simply 71% towards the three-month average of 78%. “September series ended on panic mode for bulls as Nifty nosedived ~3% for the day (Thursday) to close the penultimate session at 10,805 mark, massive unwinding of puts positions seen as short gamma traders were trapped on wrong foot,” brokerage and analysis agency Yes Securities stated in a word. 

The earlier three consecutive series noticed constructive motion, earlier than the September series slipped following a worldwide sell-off. The fall was aided by a lot of causes. “Index was moving in range for the first three weeks of the series but fell sharply in the last week due to change in Global sentiment and concern over Covid – 19 cases. Nifty has seen a negative crossover on a weekly scale after 23 weeks which has Bearish implications for the market sentiment,” stated Chandan Taparia, Derivative & Technical Analyst, Motilal Oswal. September series noticed Nifty slip expiry on expiry for the primary time in 4 months.

During the series, volatility gained 24% to finish above 23 ranges, hinting a renewed worry among investors on Dalal Street. The surge in volatility comes after 5 months of dropping expiry on expiry. “The Nifty witnessed continued weakness due to negative global cues and persistent selling from FIIs and closed the series at the lows of the month,” stated analysts at ICICI Direct. They famous that even shares from the expertise area, which have been in a position to maintain the index have witnessed vital liquidation and closed close to the times low together with the Banking and vitality heavyweights. “Considering continued liquidation of positions, the open interest in Nifty is significantly low and bias remains negative,” they added. 

Further, Yes Securities suggested investors to stay with “Low Risk strategy likely to be profitable on any sharp pullback while max loss limited to ~35 points on expiry above 11,000 mark for October series.” 

For the October series, “Maximum Put OI is at 10500 followed by 10000 strike, while maximum Call OI is at 11500 followed by 12000 strike. We have seen marginal Call writing in 11000 and 11300 strike while Put writing is seen at 10600 then 10500 strike. Option data suggests a wider trading range in between 10300 to 11500 zones,” stated Chandan Taparia.

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