Nifty Huge Call Open Interest at 18k, Will it Cross But Momentum Is Waning!

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Nifty had been moving precisely as we have been forecasting to the very hour. We have been tweeting about Nifty movement with time on the tweeter handle @kyalashish and the move has been just precise.

Following research is simple and easy that shows how the smart traders assumed to be option writers are behaving. Majority of BIG Players prefer Option selling rather than Option buying as they understand the basic math of how Options work and the probability favors the sellers.

Nifty Open Interest Profile with Neo Wave Hourly chart:

Nifty above hourly chart clearly shows Call OI buildup around 18k levels and reduction in the Put OI near 18k. This suggest that the call writers are getting more confident on the upside and it is becoming increasingly difficult for Nifty to cross back above the psychological 18k mark.

Following was tweeted across on 11th October morning –

As per Elliott Wave Prices are moving in the form of triple corrective pattern and currently wave c is going on of the 3rd pattern. This might get complete around current zone and there is already a negative divergence between prices and RSI. This shows a slower momentum despite of the euphoria we are seeing around.

This time it is the index heavy weights like HDFC Bank, ITC, Reliance that has been managing to take index higher while others like TCS are correcting their overbought levels. During such times it is best to use Time Cycles for timing the market and follow Option writing strategy based on Time Cycle and Elliott wave techniques.

In a nutshell, Nifty has to cross above 18000 – 18060 levels to resume the uptrend. Failure to do that can result into short term time correction if not price. Basis of this information and research prudent option trading strategy can be formed and one can trade objectively.

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