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Informist, Tuesday, May 26, 2026

 

By Gopika Balasubramanium

 

MUMBAI – On the monthly expiry day of Nifty 50 options, traders added short bets in the index options chain, suggesting that the headline index is likely to fall in the near term. Short positions were added in the near-month futures contracts as well. Derivatives analysts, however, expect the index to move in a range in the near term as traders added short bets across the options chain of the Nifty 50 expiring Jun. 2. and bought put options near the spot level.

 

The Nifty 50 ended at 23913.70 points, down 118 points or 0.5% Tuesday. The index came under intense selling pressure near the pyschologically important mark of 24000 points. Monday, traders had added positive bets at strike prices above 24000, triggering hopes of a rise in the index. However, they cut back on their positions on the monthly expiry day. In the near term, the index is seen moving between 23800 and 24300 points, analysts said. Going ahead, any decline towards the 23800-23700 level is likely to attract buying interest, thereby favouring a "buy-on-dips" strategy in the current market, Osho Krishan, chief manager, technical and derivatives research, at Angel One, said in a note.

 

Traders added short positions in call options expiring Jun. 2 at most strike prices. However, they bought the 25800-point call expiring Jun. 9. The premium had risen a scant 5% during the session. However, at the close, the premium was flat and the open interest was a shade less than 300,000. At the 24000-strike call, the premium fell over 35% and around 4 million short bets were added. The premium at that strike was INR 159.20. At deep out-of-the-money calls at 25000 and 25500 strikes, traders sold over 2 million contracts each, indicating that the index was unlikely to reach such levels. The highest concentration and maximum addition of open interest was seen at the 24000 call.

 

Traders sold deep out-of-the-money put contracts expiring next week and bought immediate out-of-the-money contracts. This indicates that the benchmark index is unlikely to suffer a big fall in the near term, but near-term weakness cannot be ruled out. They moved out of their positions built on the put side at strike prices such as 23000 and 22000. The premiums at these strike prices fell 32-41%. At the same time, traders bought put options at strike prices 24000, 23900, and 23800, among others. The premiums at these strike prices were between INR 85 and INR 200 after rising over 16-19%. The highest addition of open interest was seen at the 23200-strike put, with 2 million new contracts being added. The maximum concentration of open interest was seen at the 23000 put.

 

The Securities and Exchange Board of India has proposed changes to the framework regulating strike prices of options contracts across equity and other exchange-traded segments, citing inconvenience faced by traders when strike prices near the spot prices are unavailable. This usually happens during intraday volatility, when spot prices move beyond the farthest available strike price. The capital markets regulator has proposed that bourses should incorporate a minimum number of in-the-money and out-of-the-money options contracts into their frameworks. This measure would be useful only when there is "extreme" volatility in the market, a derivatives analyst at a domestic brokerage said. There is not much impact expected due to this in the current market, the analyst added.

 

--Nifty 50 May closed at 23911.30, down 151.70 points; 2.40-point discount to the spot index

--Nifty 50 June closed at 23997.20, down 109.20 points; 83.50-point premium to the spot index

--Nifty 50 July closed at 24087.00, down 123.00 points; 173.30-point premium to the spot index

 

ICICI Bank, State Bank of India, HDFC Bank, Adani Enterprises, Reliance Industries, Vodafone Idea, Wipro, and BSE were the most actively traded underlying stocks on Tuesday.  End

 

Edited by Rajeev Pai

 

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