Option Chain Analysis

Sense of caution is reflecting at a first glance in the Option chain as the ATM
Call Option has added more than thrice new contract on the short side as compared
to Put Option. Moving ahead, the next immediate strike price is reflecting the same
scenario where cumulative open interest in the 9,700 Call Option is of 17,591
contracts, the Put Option of 9,500 strike price holds only 14,665 contracts on
short side.

Short-term base for next week is emerging at 9,200 as the Put Option of the same
strike price holds maximum cumulative open interest of more than 26,700 contracts.
On the Call side, maximum total interest is placed at a 9,700 strike price.
Scenario suggesting that on going pullback has probably reached at its higher level
and further room for upside is quite limited. The expected range for the coming
days as per the data is 9,700 to 9,200.

Technical Structure

Recent upmove seems to be more of a pullback rally rather than a trend reversal
buying. Currently, the market is trading near its stiff resistance level and
ongoing upmove is likely to get abated in coming days. The 50-day exponential
moving average has acted as a supply zone for the prices twice in the last few days
and currently Nifty is again trading near the same resistance zone. RSI has been
trading in a range for the last one month and presently again trading near the
higher part of the range. The support level exists at 9,288, which is 38.2 percent
projection level of the previous week range whereas 9,650 will continue to act as
stiff resistance in coming days.

Trading Strategy

Considering the overall setup, it seems that bears can again come into action and
limited downside till 9,200 can be expected. Traders can play the setup by adopting
unconventional "Married Call" and initiate short position in futures with longs in
9500 CE. To reduce the costing of the strategy, short positions in 9000 PE can be
taken in the ratio of 1:2. As Nifty futures is trading at a discount of around 90
points we are including 9500 strike price as ATM Call Option.