A Question in Nifty Option Analysis.

Hello All,

I was going through the NSE site for Nifty options data for my analysis and found these figures which I am unable to understand.

It shows: 35000 contracts traded of Feb Nifty Call @ 6050 at 23. 35000.

What is surprising me is these are the second highest no of contracts traded today with second highest ranking in turnover and that too at almost 1000 pts difference from currect levels.

First highest Contracts traded are 39472 contracts traded of Jan Nifty Call @ 5200 (This is understandable considering settlement today)

Can anybody help this interpret.

Thank you in advance

Happy Trading

Hello,

There isnt even single person who can help me interpret this.

Here's the today'd data:

38324 contracts traded of Feb Nifty Call @ 6050. These are the highest number of contracts traded and volume as well. (of all nifty options contacts)

Happy Trading

Hi ravalsb,

You rightly pointed out it. I am also wondering how a strike price (6050) far from the underlying having so much of volume?

Why is it so surprising for 6050 calls to have good volumes?

Point here is its quite impossible without synchronizations tht one single buyer was ready to buy 35 k lots and one single writer was ready to write the same.

Why it was done??

It was done to bring liquidity to 6050 call and if u see todays trade in tht call 2day all the 35000 lots (either writing or buying) is sq offed today.

Now for sme one big they wont write for 23 rs, so ultimately they are long in at least 35000 lots of NIFTY 6050 call. And y they didnt simply buy instead of this long path , simply bcs simple if he would hav put order 4 35k lots it wud hav attracted interest of all.

So wht i conclude is there must be sme huge upside in NIFTY above 6500 bcs 6400 call is also havin huge open interest.

Also 5100 put having 2nd highest OI is being written by sme bigis not bought by thm.

A View from A My Gure..

Raval, Can u give me basics of Option Tradin?????Thanks in advance

Hi Kaveri,

Options are type of contracts which provides the option buyer the right to buy/sell the stock at a specified price (strike price) for specified quantity (lot size) on or before expiry of the option date (i.e. last thursday of every month). Maximum period for which option can be traded is three months. i.e. In February one can buy option for February, March or April.

The amount that option buyer has to pay to for availing this right is called premium.

Right to buy is called Call Option and Right to sell is called Put Option.

Once option is bought one can either 1. Excercise the option 2. Sell the option 3. Lapse the option.

In case 1. For Call Options, One takes delivery of stock on payment of balance amount and for Put options, make delivery of stock and receive balance amount i.e. contract value - premium already paid/received

In case 2. When one sells the option, difference between premium paid and received determines gain/loss. If premium received is higher, it is profit, if premium paid is higher, it is loss.

In case 3. One would allow option to lapse and thus premium paid is forfieted. Thus, Loss incurred is equal to premium paid.

If you have any doubts please let me know.

Thanks & Regards