Banking stocks made a smart recovery on Wednesday in line with the buoyancy in the overall market. Markets shrugged off prolonged weakness, taking cues from a report that RBI had decided to inject Rs 12,000-crore liquidity into the system through purchase of government bonds on October 11 to meet the festival season demand for funds.

Bank Nifty index surged 794.05 points and closed at 25,321.95 on Wednesday. The derivative October futures contract surged nearly 775 points and ended at 25,309.50.

Active Call options of Oct 17 expiry

Among the call options for the October 17 expiry, the most active in-the-money call option was 25300-call on Wednesday. The option price ended at Rs 288, gaining 261 per cent. The Open Interest in the contract saw an addition of 23,720 shares, an increase of 605 per cent.

The Implied Volatility of the option price was at 18 per cent. It indicates the underlying Bank Nifty is likely to encounter resistance around 25500-25600 levels in this expiry.

The out-of the-money 25500-Call traded very active in last session. The option price has ended at Rs 190, up by 310.80 per cent on Wednesday. The Open Interest in the contract has risen by 19 per cent. The IV of the option price was at 17.75 per cent.

With the addition of the OI in this call option, the underlying Bank Nifty is likely to encounter resistance around 25600-25650 levels in the next few trading sessions.

Active Put Options of Oct 17 expiry

In the Put options side, the 25500 In-The Money Put was moderately traded contract on Wednesday. The Option contract price declined 55.27 per cent and closed at Rs 399.50. The OI saw an addition of 9,800 shares in the contract. The IV of the option price was comparatively higher at 23.60 per cent.

This signifies that the Bank Nifty index is likely to get support around 24900-25000 levels in the short term.

The 25000 Out of the Money Put contract had turned active on Wednesday. The option price was down 68.70 per cent to close at Rs 199.95. The OI saw an addition of 83,240 shares, with the IV of the option price relatively higher at 25.50 per cent indicating that the option price was in good demand.

Since there was significant addition of OI here, the underlying Bank Nifty index is likely get support around 24800-24900 levels in next few trading sessions.

Related Topics