The fear index rallied 16% last week, stay cautious: Angel Broking
(Time Zone: Arizona, USA)
Derivatives Wrap-up by Mrs. Sneha Seth (Derivatives Analyst, Angel Broking):
"We began the week on a cheerful note and saw follow-up buying to extend the up move beyond 14650 mark. Around this levels, we found some parameters like PCR-OI and FIIs 'Long short Ratio' hinting market in the overbought zone. As anticipated, we witnessed decent profit booking at the higher level which led weekly closing below 14450 mark.
Must say, market remained volatile last week and hence we saw mixed activity in terms of open interest in index futures segment. The PCR-OI surged to 1.80 on Tuesday, which clearly suggested market was overbought. From the next trading sessions, strong writing was observed in 14600-14700 call options. Today, we also saw good amount of writing in 14500 strikes. In case of puts, hardly any meaningful build-up was seen during the week. Highest open interest concentration for the coming weekly series, has shifted lower to 14600 call and 14000 put options. The Volatility index surged more than 16% last week, which is certainly not good for bull's. Considering the overall development seen in F&O space, we expect some follow-up selling in the coming week as well. Hence, traders are advised lightening up their longs and prefer buying slightly OTM puts incase of any pullback around 14500-14550."