Banking stocks plummeted on Tuesday as the domestic currency nosedived following heavy capital outflows. Domestic sentiment was hit after the US President, Donald Trump, had announced imposition of new tariffs on an additional $200 billion worth of imports from China, sharply escalating the trade fight between the two economic giants.

The rupee weakened to 72.97 as crude oil prices continued to remain stronger amid trade tensions.

Bank Nifty September futures contract declined by 362.70 points to 26,544. The underlying value of the contract closed at 26,441.45. Bank Nifty futures closed at a 103 point premium to the underlying value.


Active call Options of Sept 19 expiry

Among the call option chain, the in-the-money Bank Nifty Call 26,400 option was actively traded on Tuesday. The option price ended down 70.70 per cent or Rs 326.60 at Rs 135.35.

However, open interest in the contract saw an addition of 81,480 shares, an increase of 4,243 per cent over Monday's open interest. This confirms that traders have taken fresh commitments expecting a pullback on the last day of the weekly expiry.

The implied volatility of the option price was remarkably higher at 20.85 per cent, which indicates there was large demand at this price. This indicates that the underlying index may witness a sharp move. The underlying index is likely to encounter strong resistance around 26,650-267,00 levels in case of upmove.

Bank Nifty Call 26,600 option contract is currently an out-of-the-money option that saw large buying interest. OI witnessed an addition of 5.50 lakh shares in the contract, whereas the option price fell by 85.10 per cent at Rs 45.25.

The IV of the option price was steeply higher at 18.75 per cent. Accumulation of fresh positions only indicates that the Bank Nifty may encounter resistance around 26,700 levels in case of any reversal in its direction.

Active put options of Sept 19 expiry

On the put option chain, the in-the-money Bank Nifty Put 26,600 option contract was the actively traded contract. Option price gained Rs 106.80 (162.50 per cent) and closed at Rs 172.50.

However, OI  shed 44.60 per cent as traders seemed to have booked profit. The implied volatility was moderately higher at 13.15 per cent. This indicates that the underlying Bank Nifty is likely to get support around 26,400-26,450 levels in this expiry.

The out-of-the-money Bank Nifty Put 26,300 contract saw good buying interest on Tuesday. This put option contract rose 92.75 per cent to Rs 41.15, while OI increased by 57.20 per cent (addition of 1.62 lakh shares).

The IV of the option price was comparatively higher at 17.95 per cent. Hence, the underlying value of Bank Nifty may get support around 26,300 levels in this weekly expiry.