Trading Guide: What should investors do on February F&O expiry day?

Uncertainty over the global developments on Russia-Ukraine geopolitical tensions has led to higher volatility in the indices this week.

However, if we look at the recent price movement, then it is seen that the index has traded with higher volatility but is confined within a broad range.

When the index comes near 16,900-16,800 range, we witness buying interest over there but selling pressure is seen on pullback moves towards 17,300-17,400.
 

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Ruchit Jain, Lead Research, 5paisa.com decodes what should investors do on the expiry day:

INDIA VIX:

The recent global geo-political developments have led to a rise in volatility and hence INDIA VIX has surpassed its hurdle of 24 and almost tested the 28 mark yesterday. The IVs of options are high which in turn results in expensive options premiums.  

FII Data Analysis:

During the start of the series, FII’s had more short positions in the index futures segment, but of late, they have covered much of the short and their ‘Long Short Ratio’ is now around 54%. They have also formed long positions in the stock futures recently.

Options Data Analysis:

Ahead of the expiry day, open interest build-up was seen in 17200-17300 call options indicating this to be a resistance range on the expiry day.

On the flipside, 17000 put option has the highest open interest which will be a level of tug-of-war on the expiry day.

The highest open interest outstanding in Bank Nifty is at 38000 call option and 37000 put option.

Expiry Day Strategy:

On the expiry day, the development of the global market is likely to derive momentum.

However, given that the data is not negative, we would advise keeping a buy-on-dip strategy and look for buying at-the-money call options in the index when it comes around the support.

Below are the intraday supports and resistances for key indices.

• Nifty Expiry Day levels - Support at 16,985 & 16,910
          Resistance at 17,180 & 17,300

• BankNifty expiry day levels – Support at 37,215 & 37,040
         Resistance at 38,500 & 38,670

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)