The April series of derivative contracts expired on Thursday capping a
settlement week that promised a lot but delivered very little. Coming
into the derivative week, the Nifty had seen a rollover of over 33% as
against an average of under 26% in the last three months. This, along
with the healthy rally that the Nifty had witnessed last week had
stoked hopes of huge rollover of long positions into the next series.
But all that went up in smoke, as a lack of confidence on the part of
bulls meant that rollovers slowed down considerably in the settlement
week. Rollover in Nifty futures was 70.69%, a shade lower than the
average of 71.19% that was seen in the past three months.
At the same time, the 17.3-point premium at which Nifty May futures
were quoting over the spot on Wednesday, thinned down to 3.45 points
by close of trading on Thursday. This suggests that many traders may
have been emboldened to initiate short positions with the 50-share
Nifty slipping below the psychological 5,000-mark.
However, the option segment painted a much prettier picture for bulls
as the Nifty put-call ratio of option contracts expiring in May,
improved to 1.18 on Thursday from about 1.06 on Wednesday. This was
mostly on the back of fresh put-writing at the 4,800, 4,900 and the
5,000 strike prices, which were much higher the number of fresh calls
that were written —most of them at 5,000, 5,100 and 5,200 strike
prices.
However, single stock futures continued to see a healthy build-up
adding a further 2.75 crore shares on Thursday. The most interesting
game over the last few days was being played in the 5,000 call option
contracts.
With 5,000 being a psychologically important level and an expectation
that it would be hard to break on the way up, huge numbers of calls
were written at 5,000 throughout the month, so much so that, the total
build-up at 5,000 calls swelled up to over 41 lakh shares by last
Friday, the highest among all option contracts. But the ease with
which the Nifty topped the 5,000 mark on Monday and managed to stay
above it until the last hour on Thursday, created a panic among these
call writers.
As a result, the 5,000 call option shed more than 12 lakh shares in
these four days, many of them even on Thursday. But the call writers
may have over reacted. The Nifty fell sharply after gapping up on
Thursday and finally settled just under the 5,000 mark – leaving these
call writers, who had covered their positions, ruing their decision.
settlement week that promised a lot but delivered very little. Coming
into the derivative week, the Nifty had seen a rollover of over 33% as
against an average of under 26% in the last three months. This, along
with the healthy rally that the Nifty had witnessed last week had
stoked hopes of huge rollover of long positions into the next series.
But all that went up in smoke, as a lack of confidence on the part of
bulls meant that rollovers slowed down considerably in the settlement
week. Rollover in Nifty futures was 70.69%, a shade lower than the
average of 71.19% that was seen in the past three months.
At the same time, the 17.3-point premium at which Nifty May futures
were quoting over the spot on Wednesday, thinned down to 3.45 points
by close of trading on Thursday. This suggests that many traders may
have been emboldened to initiate short positions with the 50-share
Nifty slipping below the psychological 5,000-mark.
However, the option segment painted a much prettier picture for bulls
as the Nifty put-call ratio of option contracts expiring in May,
improved to 1.18 on Thursday from about 1.06 on Wednesday. This was
mostly on the back of fresh put-writing at the 4,800, 4,900 and the
5,000 strike prices, which were much higher the number of fresh calls
that were written —most of them at 5,000, 5,100 and 5,200 strike
prices.
However, single stock futures continued to see a healthy build-up
adding a further 2.75 crore shares on Thursday. The most interesting
game over the last few days was being played in the 5,000 call option
contracts.
With 5,000 being a psychologically important level and an expectation
that it would be hard to break on the way up, huge numbers of calls
were written at 5,000 throughout the month, so much so that, the total
build-up at 5,000 calls swelled up to over 41 lakh shares by last
Friday, the highest among all option contracts. But the ease with
which the Nifty topped the 5,000 mark on Monday and managed to stay
above it until the last hour on Thursday, created a panic among these
call writers.
As a result, the 5,000 call option shed more than 12 lakh shares in
these four days, many of them even on Thursday. But the call writers
may have over reacted. The Nifty fell sharply after gapping up on
Thursday and finally settled just under the 5,000 mark – leaving these
call writers, who had covered their positions, ruing their decision.
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