“Now on the downside, the short-term target comes at 24,000 to 24,200 levels till 23,400 levels are cleared, while immediate support is set at 23,700 to 23,600 levels,” said Jay Thakkar, Vice President and Head of Derivatives and . Quant Research, ICICI Securities.
He mentioned that on the derivatives front, the PCR is at 1.27 which is well above 1, so it is bullish and not overbought, so there is scope for it to go higher to the upper end of the range of 1.60 to 1.70.
The highest open interest (OI) is seen on the call side at 24,000 strikes, while on the put side it is at 23,500 strikes. Therefore, the expected trading range for the day is between 23,500 and 24,000.
Thakkar suggests that if the Nifty crosses the 24,000 level, an upside move around 24,200 is likely. Otherwise, the index is likely to end in the range of 24,000 to 23,500.
Generally, the index ranges between 1.50% to 2% on the closing day. Depending on that there may be a range of 350 to 500 points. These options also align with Open Interest (OI) data.
The index is trading above its maximum pain level of 23,700 and its revised maximum pain level at 23,842, Jai Thakkar indicates strong upward momentum in the market. Given this positive trend, it suggests a bull call spread strategy for the expiration day.
Bull call spread
A bull call spread is an options trading strategy that uses two call options. It is usually deployed when a trader expects a moderate increase in the price of the underlying asset.
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(Prices till June 26)
Below is the payoff graph of the strategy:
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(Source: ICICI Securities)
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)
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