The Bank Nifty index rose sharply on Wednesday as investors’ sentiment improved on reports of rise in June’s Purchasing Manager’s Index yesterday. After contracting in May, the Nikkei India Services Business Activity Index rose to 52.6 in June from 49.6 in May.

The Bank Nifty June futures contract has ended higher by 170 points at 26,425. The underlying value of the contract closed at 26,433.95.

Call Option of July 12 expiry

Among the call option chain the In The money Bank Nifty Call 26400 option traded very active on Wednesday. The option price was up 24 per cent to close at Rs 209.10 on Wednesday. The OI in the contract too has jumped by 140.55 per cent. This confirms that traders are taking fresh positions in the contract as the underlying moved up yesterday. There was also lesser demand for the option as the implied volatility is comparatively lower at 10.20%. It is an indication that the Bank Nifty may encounter stiff resistance at 26600 levels in the short-term.

The Bank Nifty Call 26600 option contract is currently an out of the Money option that turned active. The option price gained 21.65% at Rs 120.80 on Wednesday. The OI in the contract surged 229 per cent. The IV was at 10.80% that indicates the option price was not expensive. This confirms that the Bank Nifty may face resistance around 26600-26700 levels before the expiry.

Put Option of July 12 expiry

On the put option chain, the in the money Bank Nifty Put 26500 option contract was the most actively traded contract on Wednesday. The put option price was down 40.39 per cent to close at Rs 216.30.  There was a large accumulation of OI in the contract. The OI has soared 1127 per cent with the implied volatility remained comparatively higher at 13.60 per cent. This confirms that the underlying Bank Nifty is likely to get traction around 26300 levels in case the underlying moves lower for this expiry.

The out of the money Bank Nifty Put 26200 contract witnessed big interest in Wednesday’s trading session. This put option price declined 51.80 per cent to Rs 96.05 while the OI saw over four-fold increase in the contract. The option price has turned costlier with the implied volatility at 13.63%. This indicates that the Bank Nifty is likely to get support around 26200 levels in case of a downside.

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