Options/futures data for 3rd Sep (EOD)

1. 5400PE stands out as something that's history defying. In my 12 months of tracking OI of puts/calls, I have never seen 1.14Cr OI on any put/call in the very first week of a series. The simple interpretation is 5400 put writers will defend this market. The only negative I attach to this is if put writers have done put back spread trade where they sell 5400PE & buy lower level PEs. In that case its dangerous because these put writers will cover the puts very fast if there is a very fast fall.
2. Calls at 5500/5600 are still getting added with 5500 being the resistance now. But we wont stay in the 5400-5500 range for sure. Something has to give way next week.

3. What's bullish is 5500PEs are also being added - almost 30% increase in OI this week. So upside can easily come if more 5500PEs are added and 5500CEs covered.

4. Lower levels puts addition has slowed down towards the end of this week which is reflected in the PCR reduction from 1.48 last week to 1.38 now. But still this is the first time I have seen 80-90L OI on lower level puts in the very first week of a series.

Nifty Futures:

3.4Cr OI up 2.6%

Banknifty Futures:

25L OI up 2.3%

To end this analysis -- I see a dire warning in this market for sure. This is an options dominated market with futures at one of the highest OI ever. If for whatever reason this market breaks that sacrosanct 5350 level - the fall will just accelerate because the put writers who now seem like heroes will be forced to cover and the buyers sure will not give them time to cover - as gap downs could just be too big.

And another warning if you are considering naked put writing as way to make easy money because the market has not fallen in last couple of months - remember law of averages will eventually catch up as it did in almost equal intervals "July 2009-Oct 2009-Jan 2010-May2010 -....? 2010"