Need explanation

Hi ! All,

If you see data of Options.You'll find that,the Put of 4500 has huge Open Interest & Good Open Interst is also seen in the Put of 4200.What does it indicate? If we say,it belongs to the writers,then How any -one would write the Put of 4200 that's trading at Just Rs.8/-,in such a bear market? As the risk remains high. It would of great help,if someone clarifies this matter.Waiting for positive reply.

Thanks & Regards,
Mandar Datye.

Re: Need Guidance 4200 PE OI INCREASED!

Most of Open Interest seen in the 4200 Put is due to PUT BUYING in this BEAR MARKET.
Made a Excel for U with clear example. See Below.
Happy Trading.

You can download any PE/CE data for past 90 days with OI for your analysis from link below :-
http://nse-india.com/content/fo/fo_contractsdata.htm

Best Wishes.

Thanks a lot for your guidance.Sir,then can we expect that,the position are getting built slowly & institutions are highly bearish on the markets?

Re: Current Nifty Trend..

Yes. 'Out Of The Money PUT' [For a put, when the strike price is below the market price of the underlying asset, like 4200 PUT,4300 PUT, 4500 PUT ETC.] position are getting built slowly with falling market indicates institutions are highly bearish on the markets.

Technical reason: Trend is still clearly down from Nov 2010, as nifty making lower high & lower low constantly in daily & weekly chart. Supports moving slowly downwards 5200 to 4700 to 4500. Next supports 4200/4000.

Fundamental Reason: There is no positive trigger [Reserve Bank Rate Cut/Lower inflation/fiscal policy change etc] for market b4 budget [End of FEB 2012]. Rupee depreciating relative to US$ almost 20% [Rs45 to Rs54], FIIs withdrawing money from India as they see profit. Market usually falls big in Jan since Jan 2008 it happened.

So institutions are highly bearish & expecting another big fall in Jan before trend change. But, they were succeeded 1st time [1st week of dec 2011 when nifty near previous swing support 5180, made high near 5100 & fallen big].
Now market is little bit oversold but Month of January usually belongs to the bears & technically there is big resistance near 4890-4950 zone. Lets see.

Happy Trading.

Thank you Sir.I'm Technical Analyst.Now getting knowledge of Derivatives.As it'll act as a complimentary to each other.In my opinion market has to be sold on every rally.If my analysis is anything to go by,then once Cash Nifty breaks 4400(which is very likely),then bottom will be seen around 4000-3800.