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Informist, Friday, Aug. 28, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders wrote contracts on both sides of the options chain of the Nifty 50 index as expectations of a range-bound market and accelerated theta decay ahead of the weekly expiry Tuesday deterred long positions. Premiums on some call contracts with a later expiry, however, increased as traders rolled their positions up and out, indicating a slow-moving market in September. A fall in open interest at some call options also showed that writers chose to cover their short positions after the Nifty 50 rebounded from its immediate support levels.

 

On Friday, the Nifty 50 ended 0.4% higher than Thursday at 24175.65 points, 33.25 points higher than at 1515 IST, when the continuous trading session ended. Information technology stocks rose sharply after strong July quarter results from software bellwether Salesforce and artificial intelligence market leader Nvidia Corp., adding to hopes of IT companies getting large AI-led deployment and workflow-related orders in the future. Metal counters also saw healthy buying interest. Meanwhile, a fall in shares of select consumer-facing stocks put pressure on the headline index.

 

Premiums across long call contracts expiring Tuesday across 24300-24500 strike prices declined 11–50%, with theta on these options ranging from a high of (-)INR 18 to a low of (-)INR 12. Theta decay is the erosion of extrinsic (time) value of an options contract as it nears its expiration date. It works against long positions while favouring options sellers as they profit from the daily erosion of premiums. The highest call base at 24300 strike price marks the point where the headline index is likely to find resistance. 

 

Similarly, premiums across long put contracts across 23500-24100 strike prices declined sharply as theta decay picked up pace. A fall in open interest at deep-in-the-money put contracts also indicated that traders chose to lock their profits amid low appetite for risk. The highest put base at 24000 strike price, followed by 24100 strike price, indicates continued support for the headline index at these levels.

 

Friday, premiums on call options were hit after limited auction repricing. Traders piled onto near-the-money call contracts after indicative closing showed a sharp jump in the Nifty 50 index. However, limited auction repricing increased selling pressure on these contracts. Around the time when continuous trading halted, the 24200 call option was valued at INR 101.95 and the 24150 call option was priced at INR 132.25. These contracts closed at INR 97.20 and INR 127.50, respectively. 

Put writing across near-the-money strike prices increased rapidly on contracts expiring later than Tuesday and traders also covered their short positions. Premiums on the 23300 and 23400 strike prices expiring Sept. 22 declined over 80%, while premiums on 23550 and 23550 strike prices expiring Sept. 15 declined around 60%. An opposing trade strategy was seen on call contracts, as already expensive premiums across 24500-24700 strike price rose 5-10%. Some deep-out-of-the-money long put trades were also executed, primarily as a hedging tool.
 

This week, the Nifty 50 ended 0.3% lower from the previous week. Traders are waiting for US Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium for greater clarity on the US interest-rate outlook. While stronger-than-expected June quarter earnings added strength to the bull case for the Nifty 50, some analysts argued that profit margin contraction on insufficient price hikes and the weak monsoon will take its toll on earnings in upcoming quarters.

 

--Nifty 50 September closed at 24349.00, up 67.10 points; 173.35-point premium to the spot index
--Nifty 50 October closed at 24460.50, up 56.00 points; 284.85-point premium to the spot index

--Nifty 50 November closed at 24578.00, up 52.80 points; 402.35-point premium to the spot index

TVS Motor Co., Infosys, HDFC Bank, BSE, Coforge, Tata Consultancy Services, Reliance Industries, Bharti Airtel, ICICI Bank, and Divi's Laboratories were the most actively traded underlying stocks Friday.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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