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The Bank Nifty index surged on Wednesday after the central bank announced that it would purchase government securities of up to Rs 10,000 crore that is expected to ease the current tight liquidity condition. The Bank Nifty June futures contract gained 353.80 points to close at 26,612.20 on Wednesday. The underlying value of the contract closed at 26,557.70.
Active call options of June 28 expiry
Among the call option chain the In-The-money Bank Nifty Call 26300 option was the actively traded contract on Wednesday. The option price climbed 84.25 per cent to close at Rs 406.45. However, the OI in the contract fell by 23.35 per cent. This confirms that traders have pruned some of their positions in the contract booking profits. The implied volatility of the option price was comparatively lower at 13.64 per cent. It signifies that the Bank Nifty is likely get support around 26,300 levels in the short-term in case of a downside movement.
The Bank Nifty Call 26800 option contract is currently an Out-of-the-Money option. The option price rose 109 per cent and ended at Rs 129.35 on Wednesday. There was an addition of the OI to an extent of 13.40 per cent. The IV was seen at 13.30 per cent that indicates there was good demand for the contract. Hence, the Bank Nifty may encounter resistance at around 26800-26900 levels in the short term.
Active put options of June 28 expiry
On the put option chain, the in-the-money Bank Nifty Put 27000 option contract was the actively traded one on Wednesday. The put option price was down 42 per cent to close at Rs 444.35. The OI too has declined by 37.40 per cent for this contract. The implied volatility was relatively lower at 12.40 per cent. Traders have reduced their long puts after the Bank Nifty witnessed a smart rally yesterday. This underscores that the spot Bank Nifty is likely to decline to 26,400 levels in case of a reversal of the uptrend.
The out-of-the-money Bank Nifty Put 26300 contract saw maximum addition of OI in Wednesday’s trading session. This put option price declined 64.65 per cent to end at Rs 91 while the OI climbed by 90 per cent. The option price was not so expensive with the implied volatility seen at 13.60%. This indicates that the Bank Nifty is likely to decline below 26300 levels before the expiry of the contract.
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