Some FnO ideas

ADANI ENTERPRISES - NSE CODE: ADANIENT

LOT SIZE: 500

Action: Short between 550-570 ; Stop Loss: 580+ ; Target 432

Approx Trade size: 2.7L

Approx Margin: 54000

4th Jun - Pre-market update

Options data:

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5200CE: 67L OI up 10%

5100CE: 54L OI down 5% ==> Resistance

5100PE: 38L OI up 84% -- A whopping 17L puts written yesterday. Sometimes these are market makers writing to themselves to confuse others - kind of like Cell Phone signal jammers!

5000CE: 33L OI down 6% -- only 2.3L calls unwound?? Very suspicious!

5000PE: 67L OI up 37% -- Again 18L puts are written. As I said for 5100PE - this could an optical illusion created by market makers.

4900CE: 64L OI up 1.33%

4900PE: 23L OI down 10% -- If this move is for real, I would have expected this OI to reduce lot more than 10% because call writers will be under pressure if market hits 5200+. Need to watch today's data

FII data:

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Index Futures: 1782Cr BUY

Index Options: 69Cr SELL

Stock Options: 474Cr BUY

Looks decent numbers from FII buying - but will there be follow through? I am always suspicious of GAP up openings in a heavily shorted market.

World Markets:

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S&P500 closed 0.4% up at the doorsteps of 200DMA. Europe closed strong with 1.2 to 1.6% - but off 1% from day's highs. Again lack of "follow through buying"? The first leg up is short covering but if there is no follow through buying then there is no rally.

One Interesting Analysis:

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So when the whole Main Stream media (CNBC folks) are celebrating the massive rise of Nifty in last 2 days - I went and checked what has happened to Nifty/Banknifty Open Interest in last few days. Oh man - its shocking for me - see this GIF to believe it

So the Open Interest in Nifty increases 8% on a day it falls from 5080 to 4960 and it reduces less than 1% when it gaps up to 5090. How much more fake can it get?

Same thing with BankNifty - OI up 14% on fall day but with 2 massive rise days OI has almost no change.

One last note - On the turnover on first 5 days of this series - 65k Crores, 65k Crores, 82k Crores, 73k Crores, 76k Crores. This is much less than the average monthly turnover of 1 Lakh-Crores in May. A low volume rise in a shorted, down trending market is could be only called short covering rally if there is no follow through buying.

3rd June - pre-market update

Options data:

5200CE: 61L OI up 14%

5100CE: 58L OI down 1% ==> Resistance

5100PE: 21L OI up 2%

5000CE: 36L OI down 9%

5000PE: 49L OI up 2%

4900CE: 26L OI up 5%

4900PE: 64L OI up 18% <== Support

4800PE: 63L OI up 7%

Conclusion: Calls covered at 5000 says upside is definitely possible. Still 5100 the resistance - need to see if calls will be covered @5100 and puts will b written @5000 today.

World markets:

S&P500 up 2.5% - but what is has not even managed to do is reach high of Friday. Similarly Europe closed flat from lows of the day.

FII data:

Index futures: 174Cr SELL

Index Options: 884Cr BUY

Stock futures: 390Cr BUY

2nd June - pre market update

Options data:

5200CE: 54L OI up 4%

5100CE: 58L OI up 8%
5100PE: 20L OI down 2.5%

5000CE: 40L OI up 28%
5000PE: 48L OI up 1.7% ==> this is still not completely ruled out level unless lost more calls are written today & puts covered

4900CE: 25L OI up 9%
4900PE: 54L OI up 5% ==> Support here for now. So market slips too much below 4800, short covering can be expected.

4800PE: 58L OI up 1.5%

Another interesting observation was that 4300PEs added 10L shares in OI and 4400PEs added 9L shares in OI. Somebody buying protection there?

World markets:
S&P500 fell 1.7% after being close to green line for sometime, European markets staged a strong comeback from down 2.5% to close flat but they are trading 1% down right now.

FII data:
Index Futures: 902Cr SELL
Index Options: 2500Cr BUY
Stock Futures: 5Cr BUY

This month FIIs are short in index futures by 740Cr and long stock futures by 1100Cr.

Nifty has multiple supports between 4960 to 4900. If all are breached then we are headed to much below levels anyway.

1st June.

Options data 31st May:

5200CE: 51L OI up 10%

5100CE: 54L OI up 1% ==> Even when market is pushing higher not many want to write calls @5100. Definite bullish bias.

5100PE: 21L OI up 11%

5000CE: 31L OI down 1.2% ==> Again call writers are scared to write calls at 5000 too.

5000PE: 47L OI up 26%

4900PE: 51L OI up 13%

4800PE: 57L OI up 11%

Conclusion: Puts are being generously written and calls are being covered or reluctantly written @5000/5100. Definite bullish bias from options data.

FII dta:

Index Fut: 387Cr SELL

Index Options: 1294Cr BUY

Stock futures: 182Cr BUY ==> They have bought 1100Cr in 2 days and from last few days of May series their buy stands a net of a whopping 5500Cr in stock futures. If I have seen history of all month right this should imply 5400+ in June/July series. Somehow my heart doesn't want to believe but mind says u gotto believe data. The question is to drink the "bull syrup" or not in stock/index futures??

World Markets:

US was closed but S&P500 futures are down 0.7% to 1082. Europe was as flat as a football ground yesterday - clearly missing the big daddy (US markets) for direction. In another development German President has resigned - no clue what is the impact on world markets (if any).

Few interesting observations:

1. Turnover in FnO: Last 2 days has been low turnover in FnO - After hitting 1 Lakh-Crore consistently for 10-12 days in May the turnover has reduced to 65k Crores in first 2 days of this series. Low volume rise?? But FIIs are actively buying in Stock futures.

2. Futures Discount: Nifty futures is trading with a 25-30 point discount. Not sure what to make out of that? Over the long weekend in US, may be FIIs are on vacation and will back and will start the real trading today. Most of the time I have seen that the discount is resolved by an intraday fall of 70-80 points and a massive short covering in the afternoon. Will we get something like that today/tomorrow?