There seems to be lot of confusion in traders. Last three days though there were no perfect Doji candles, opening and closing prices were more or less same.
NIFTY could show 200-225 points move non either side after opening on Tuesday till weekend. RSI near oversold could see slight bounce back, but over all trend seems to be negative for very short term. And here is the reasoning for this hypothesis.
FIIs are selling in cash though buying in F & O segment to hedge their bets.
Global markets were negative and Singapore NIFTY touched 7760. But it is important to note, slight recovery in global market could see quick 100 points gain in SGX NIFTY. So there is lot of positive sentiments and hopes on Modi Government. His (Modi) speeches, cleanliness drive, meetings with US leaders etc. everything is being propagated by media and this will keep morale of traders very high.
But what was in minds of so called professional smart option traders by end of trading session on October 01?
Look at the OI table of October 01.
Resistance at 8200 and support around 7800.
But you would notice lot of unwinding of PUT contracts from 7850 to 8200. OI has decreased considerably. So in simple term either former seller has bought or former buyer has sold. In any trade or for that matter in any business or browse there should be one winner and one loser. "Win-Win" trade is good terminology for McKinsey's of the world, in reality there is one persons wins and other loses.
Generally falling OI will indicate that loser are exiting. Loser abandons the hope and new loser is unwilling to take the risk. This is a first sign of an exhaustion of the trend.
In this case of OI table of October 1, this is precisely the story.
PUT sellers (bulls) could not find new bulls on October 1 in many contracts (eg. PUT contracts from 7850 to 8200), and hence open interest went down. Study table minutely and one can notice IVs also gone down reasonably so these must be PUT sellers (bulls) and this strengthens the view of creeping bearishness.
As mentioned earlier, strong support around 7800 and 7800 PUT is being traded around 50, so NIFTY should not go down below 7750 immediately.
With this view, stay foot in all bear positions such as BOI 230 PUT, DLF PUT etc.
Buy 7800 PUTs for next week with strict SL.
No other new trade on Tuesday, I will study market dynamics on Tuesday and then take new positions.
Disclaimer: This blog does not take any responsibility of your profit/loss
NIFTY could show 200-225 points move non either side after opening on Tuesday till weekend. RSI near oversold could see slight bounce back, but over all trend seems to be negative for very short term. And here is the reasoning for this hypothesis.
FIIs are selling in cash though buying in F & O segment to hedge their bets.
But what was in minds of so called professional smart option traders by end of trading session on October 01?
Look at the OI table of October 01.
But you would notice lot of unwinding of PUT contracts from 7850 to 8200. OI has decreased considerably. So in simple term either former seller has bought or former buyer has sold. In any trade or for that matter in any business or browse there should be one winner and one loser. "Win-Win" trade is good terminology for McKinsey's of the world, in reality there is one persons wins and other loses.
Generally falling OI will indicate that loser are exiting. Loser abandons the hope and new loser is unwilling to take the risk. This is a first sign of an exhaustion of the trend.
In this case of OI table of October 1, this is precisely the story.
PUT sellers (bulls) could not find new bulls on October 1 in many contracts (eg. PUT contracts from 7850 to 8200), and hence open interest went down. Study table minutely and one can notice IVs also gone down reasonably so these must be PUT sellers (bulls) and this strengthens the view of creeping bearishness.
As mentioned earlier, strong support around 7800 and 7800 PUT is being traded around 50, so NIFTY should not go down below 7750 immediately.
With this view, stay foot in all bear positions such as BOI 230 PUT, DLF PUT etc.
Buy 7800 PUTs for next week with strict SL.
No other new trade on Tuesday, I will study market dynamics on Tuesday and then take new positions.
Disclaimer: This blog does not take any responsibility of your profit/loss
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