Flood of calls at 4300-4350

MUMBAI: Markets are expected to trade in the range of 4,100-4,250 during the week. Nifty June futures on Friday ended at 4,124, a discount of 21 points to the spot index and down 36 points. Open interest in the contract rose 10.1% to 3.75 crore, with the total number of contracts traded at 6.75 lakh. The near month contract touched a high of 4,175 and low of 4,107 intra day. National Stock Exchange’s Nifty ended at 4145, down 34 points, or 0.8% from Thursday. Intra day, the 50-share index touched a high of 4,195 and low of 4,126.

The put-call ratio declined from a high 1.7 to reasonable levels of 1.2. Heavy writing of calls was witnessed in 4300 and 4350 strikes. People writing calls at these levels are of the view that market is unlikely to touch these levels in the near term.

There was also heavy put writing in 4200 and 4100 strikes. Traders who are buying puts are hedging their positions by buying futures.

“People are shorting Nifty and buying stock futures. Nifty is expected to be range-bound between 4,100-4,250 during next week. The Nifty touched 4,108 levels twice in intraday and bounced back from those levels. I don’t see it falling below that,” said a derivatives analyst with a top brokerage. Expiry of June futures can happen around 4,280-4,340 levels, he said.

Nifty July futures saw open interest rise 16.2% to 10.66 lakh. The contract ended at 4,122. Nifty August closed at 4,119.50, a discount of 26 points to the spot. Open interest in the far month was up 2.7% to 2.24 lakh.