Bank Nifty Expiry today: Options market reflects 50,500 level to be crucial

Equity markets opened marginally lower on Wednesday but pared the early morning losses by noon. The benchmark Nifty 50 was trading 0.08% higher at 24,718 while the Sensex was trading 0.04% lower at 80,769.07 by noon.

The Bank Nifty index, which has its expiry on Wednesday, was trading 0.59% lower at 50,501.55 at 12:00 p.m. The options market is currently factoring in an immediate resistance at the 50,500 level with the strike having an open interest of 68.1 lakh at noon. The change in open interest for the strike stood at 60.2 lakh.

On the downside, the market is reflecting a support at the 50,000 level with the Put options at this strike having an open interest of 59.7 lakh at the time of writing. The change in open interest stood at 26.1 lakh. It is noteworthy that the open interest figures at both the support and resistance levels are lower than usual, implying a lack of conviction among traders.

The max pain of Bank Nifty stood at 50,500 at the time of writing. The max pain theory shows the level at which option sellers are likely to have the least loss on expiry. However, this level is dynamic and keeps shifting when the market moves significantly in either direction.

On a 15-minute chart, the index traded below its 21-period and 50-period exponential moving averages (EMAs) and reflected a put-call ratio (PCR) of 0.76 which indicates a neutral sentiment. PCR is the ratio of the number of puts to the number of calls of an asset. In extreme market movements, the PCR may shoot up to as high as 1.85 during an upmove or to as low as 0.45 during a downmove.

India VIX, an index that reflects the anticipated volatility in the market over the next 30 days, fell 1.95% on Wednesday to 13.55.