The Bank Nifty Futures May contract fell by 374 points on Tuesday and closed at 26,167 levels. The contract is trading at a discount to its underlying Bank Nifty index, which fell about 359 points to close at 26,254. The sectoral indices related to Bank Nifty also showed a negative trend. The Nifty PSU Bank index fell 89 points or 2.95 per cent to end at 2,940 levels, while the Nifty PVT Bank index also slipped 200 points or 1.30 per cent to 14,917 levels on Tuesday.

Call options

Among the call options for May 31 expiry, the most active in-the-money call option was 26,100-call. The option price nose-dived 67 per cent to close at ₹150. The Open Interest too increased nearly 50 per cent. After the sharp fall in the option price, some fresh OI positions were built in this contract. Hence, this strike price could act as a key support base for the month expiry.

The out-of the-money call option 26,400 was active in the last session. The option price plunged 82 per cent to close at ₹39.25 on Tuesday. The Open Interest, however, has zoomed over four-fold or 463 per cent. This shows that option buyers appear to have taken long positions, expecting sharp volatility before the contract expires on Thursday.

Put Options

In the Put options, the 26,300 in-the money put was active. The Option contract price gained 325 per cent to close at ₹185.65, while the OI had declined by 45 per cent. This indicates that most traders have booked profits or closed their positions.

The 26,000 Out-of-the-Money put options traded actively on Tuesday. It closed higher at ₹57.35, increasing over two-fold. Interestingly, the OI for this contract was down nearly 19 per cent as there are only two trading sessions left for the contract expiry. The options chain of the Bank Nifty signifies that it is likely to get support around these levels.

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