Derivative Insights - May 27, 2020 - Geojit

The Nifty May futures closed at 9034 with a gain of 0.07% or 6.2 points on Tuesday. Open interest of the current month expiry declined by 11.79 lakh shares indicating covering of short positions in the markets. Nifty future traded at premium of 4.95 points against a discount of 11.45 points on Friday. Nifty's VIX slumped nearly 3% to close the day at 31.4700 versus 32.3775 on the previous day. FIIs turned to sellers in the F&O segment after four days of buying; sold derivatives worth Rs 926.46cr as per provisional figures yesterday. On the open interest front, FIIs reduced exposure in both future index short and long by 9.42% and 1.62% respectively.

Nifty Outlook

Traders are pricing in a lower potential of upside breakout, with exits seen from call strikes outwards of 9600, which have seen decline in both volume and OI. Addition to the close-to-the money call strikes have been largely along shorts unsurprisingly. However, put shorts dominate the short additions along index options. This, besides the obvious theta play, also suggests that the view is not unilaterally bearish yet. Therefore, we revert to a range expectation again, and that can only mean reversal of ongoing bear moves.

Source : Equity Bulls

Keywords