Bank Nifty Options trade bearish

The market has turned bearish on Friday due to selling in key index stocks amid selling in banking stocks.

What the Options on the derivative section point to in Bank Nifty counter.

At 11.50 am, the Bank Nifty futures were down by 178 points, trading at 25,894, quoted at a discount of 10 points to the spot price.

Looking at near the money Strike price on the Option side of Bank Nifty, we would be able to understand the current bearish sentiment on this counter.

Bank Nifty 25900 call option

The 25900 call option Open Interest improved by 12,120 contracts to 20,080 contracts against yesterday’s 7,960 contracts. The Call option price was, however, down by 40 per cent at Rs 276. What it denotes is that the traders have started covering their earlier short positions in the said call option.

Bank Nifty 26100 call option:

The open interest has increased to 30,080 contracts against 24,800 contracts, up 22 per cent. However, the market price for this option has fallen by nearly 30 per cent to Rs 184. This makes it clear that the traders are actually covering up or buying out the short positions that improved the number of contracts　

What the Near the Money Bank Nifty Put options reveal

At 11.45 am:

It appears traders have built up long positions in some of the Put contracts while in some others they have pruned their contracts.

Bank Nifty Put 25900 contract

The Open Interest (OI) has gone up to 17,320 contracts from 16,200 contracts, showing 7 per cent rise in contracts with the Option price has gone up by 30 per cent to Rs 281. This denotes that the traders expect decline from this level.

When the market price of certain In The Money put contracts show green, traders preferred to book profit pruning positions on the Put Option Strike of 26,300, 26,400, 26,600 contracts, where they see gains.

BanK Nifty options May 18

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