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Bank Nifty index declined on Tuesday taking cues from weak Asian and European markets. Bank Nifty Futures June contract was down by 125.45 points to end at 2,6260.80. The contract is trading at a 5-point discount to its underlying Bank Nifty index.
The sectoral indices related to Bank Nifty were also down yesterday. The Nifty PSU Bank index lost 47 points or 1.57 per cent to end at 2,974.65 levels, while the Nifty PVT Bank index too declined 85.65 points or 0.55 per cent to 14,902.60.
Call options of June 28 expiry
Among the call options for the June 28 expiry, the most active in-the-money call option was 26,000-call on Tuesday. The option price ended at Rs 395.15, down Rs 89.70, or 18.50 per cent. The Open Interest was up by 21.60 per cent in the contract as traders have added fresh positions here.
The Implied Volatility of the option price was relatively lower at 11.35 per cent, compared to the June 21 expiry. It indicates the underlying Bank Nifty may fall below the 26,000 levels before the contract expiry. On the upside, it may encounter resistance around 26,500 levels.
The out-of the-money 26,500-Call traded very active in last session. The option price was down Rs 66 or 33 per cent to close at Rs 132.15 on Tuesday. Interestingly, the Open Interest, however, rose 21.57 per cent.
The IV of the option price was at 12.60 per cent, which indicates that there was less volatility in the contract. With the addition of the OI in this call option, the underlying Bank Nifty is likely to encounter resistance around 26,500-26,600 levels in case of an upside.
Put Options of June 28 expiry
In the Put options side, the 26,500 In-The Money Put was active on Tuesday. The Option contract price gained Rs 59.25 or 19 per cent to close at Rs 369.55. The OI, however, had declined sharply by 24 per cent.
The Put Option buyers seemed to have booked profits in the contract. The IV of the option price was relatively higher at 16.77 per cent. This signifies that the Bank Nifty index may fall below 26,100 levels in the short timeframe.
The 25,900 out-of-the-money Put contract turned active on Tuesday. The option price was up Rs 23.55 to close at Rs 116.60. The OI has gone up by 29 per cent with the IV of the option price higher at 17.20 per cent indicating that the option price was expensive. Since there was significant addition of OI here, the underlying Bank Nifty index may decline to 25,800 levels before the expiry.
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