Nifty Options Chain Analysis – 16 Dec 2014

Nifty Put Options went explosive today with Nifty coming close to 8050 today (day low 8052), having lost nearly 600 points in the last two weeks, making people want to buy protection as urgently as possible, at whatever price. We were selling Puts (with good profit) that we had bought when they were much cheaper. All those folks who resisted buying Puts, hoping for a pullback, could no longer wait and watch the market sinking, and see the Nifty Put options swelling in value 50% per day, every day!

Imagine, Nifty Dec 8500 Put option was at Rs 50 at the start of this series, and nobody really expected much downside despite sluggish moves in November 2014. That same Nifty Dec 8500 Put option was at 383 today, a gain of 666%!! Agreed that Nifty Put options have not paid off always in last 12 months, because of the bullish market, but they pay when markets are correcting from high levels, like in this month.

We have sold most of our Dec 2014 Put Options because 8050 is a strong support on Nifty and the market majors/bulls will make an attempt to defend it. The real bull work is always below 50 day moving average, which is now. Lets see if bulls have the strength. After all, if Bulls can’t defend Nifty 100 day moving average (8055), then they are not bulls anymore, and they might as well go home in and sleep in their shed.

About 10 million puts are now at 8000+ 8100 level, making it rock solid defence. Since others have bought the puts now, so we don’t have to buy anymore Dec puts. Now, there are about 6 million deep in-money puts between 8300 to 8500. Their value needs to be reduced as calls have already got busted. 8300 is possible by expiry as it will reduce the value of in-money puts while busting the large call base from 8300 above.nifty-options-chain-16dec2014