Analysis and Trade Plan - 17 July 2019

  • 11650 was a good resistance that needed broken. OI spurted to 2 million in the day and hence the assertion that market will break that point. 30640 is crucial for Bank Nifty now.

  • SGX Nifty is a little down right now. But I am expecting a minor positive opening for our markets.

  • Technically, Nifty needs to sustain above 11700 to move further up. India Vix at 11.56 currently is conducive for that.

  • India Vix at such level is not good for Option Writers. Premiums are way low and right premium is only available at dangerous distance. Forget greeks.

  • If it is any Indication, I witnessed long buildup on Nifty futures yesterday.

  • Pain is steady at 11600, but PCR went bullish to 1.27 yesterday.

  • Close to 3 million OI was added to Put side on Nifty while 1 million OI was shed at calls.

  • There was major put writing in monthly nifty contracts suggesting we might take support at current levels and may close the month a little up from here.

  • Speculation in Bank Nifty is currently muted.

  • Max Pain and PCR are currently not looking bullish. But given the low vix environment and strength coming in Nifty, we can see some bounce.

  • Call Unwinding was witnessed yesterday on many strikes but was not followed by heavy put writing. Put writing was normal not indicating any trend.

  • On monthly contracts, puts were added aggressively against suggesting that we might take support at 30500 levels and close higher by the end of month.

  • I think the trigger that we are looking for in Indian Markets will come from the fed meeting at the end of month or after the earning season.

  • Till the vix is trading at such low levels, option trading is going to be tough.

Till now, I was trading with expectations that market will get a trigger. First it was elections. Then it was budget post elections. Then it was fed announcements. But time again we have not got the trigger that we wanted and India Vix is dragging at lowest levels. Till we do not move above 14 levels of India Vix, sluggishness will continue. And till that that time, it is best, if we stick to range bound strategies. Everytime I have tried to catch a trend, it has caused a stoploss.

Currently I am trading with sideways to bullish bias. But I will not trade any more directional strategies till India Vix moves into 14 territory.

Rohit Katwal

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