Nifty: Derivatives data, Psychology & Today's movement

6 thg 1, 2021

Nifty
Closing Price 14146

Looking at the charts we observe Nifty was trading near Line of Resistance (look at my previous idea for more clarity)

This is the Derivatives Data Analysis for Positions taken by various Market participants a day before

Futures Data
- Retail participants added 23.36 Index Futures Long Contracts & added 18.39 K Index Futures Short contracts
- FIIs booked profits in 1.95 K Index Futures Long Contracts and exited from 423 Short Contracts
- Proprietary traders added 312 Index Futures Long contracts and added 3.01 K Short contracts
Call Option
- Retail participants exited from 34.71 K Call Long Contracts & added 1.97 K Call Short contracts
- FIIs exited from 20.25 K Call Long Contracts and exited from 15.15 K Call Short Contracts
- Proprietary traders added 20.64 K Call Long contracts and exited from 21.17 K Call Short contracts
Put option
- Retail participants added 2.67 Lakhs Put Long Contracts & added 1.96 Lakhs Put Short contracts
- FIIs added 16.69 K Put Long Contracts and added 34.02 K Put Short Contracts
- Proprietary traders added 48.36 K Put Long contracts and added 1.02 Lakh Put Short contracts

So we see Retail Participants were Index Futures Long and also major Net Put buyers
FIIs and Proprietary traders on the contrary were major Net Put Sellers

Nifty opened and stayed flat till 12:30pm not giving much to Futures buyer and also testing the patience of Put Buyers. In that time we also saw many accepting that Put buy is not working and some started squaring off their Put buy position and many started switching to Call Buy.

Once that phycological shift happened we saw a one shot drop of 160 points between 12:30pm-2:00pm giving that what if...feeling.

And then markets recovered back 100 points to close the day at 14146 ensuring both Call and Put closing in negative territory or flattish at best.

My friends understand that Out of 6 hours and 15 mins daily trade time, that 1 1/2 hour of time is all what Put buyers had in their favor. Because after 2:00pm it was back in favor of Put sellers

So that 1 1/2 hr time translates to just 24% favorable time frame for Option Buyers of the total trading time for the day.... So if you are buyer of an option this is what odds would look like and More so the reason why you need to analyze more in depth, do your home work and be prepared. Remember, there is no free lunch.

If you have been following me, we had suggested a 13800 Put sell on January 1st 2021 and subsequently on Jan 4, we also suggested adding a Sell Position in 14200 Call

Go on and hit the Play button on that chart and we are not far off from what we had predicted...

Today we closed both the positions in profits.

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Take care & safe trading...!!!