Expiry trade setup: Will NIFTY50 close above 21 EMA resistance on Thursday? here's all you need to know

NIFTY50

Max call OI: 25,500

Max put OI:25,200

(Ten strikes to ATM, 17 July expiry)

NIFTY50 closed with little gains on Wednesday, indicating no clear direction. The index continued to trade in a very narrow range of 25,000 to 25,200 as it faces resistance near the 25,250 level. The volatility index (VIX) also traded to an 8-month low level at 11.2, indicating no major and wild swings in the market.

On the technical charts, the index failed to close above the 21 EMA level of 25,237, indicating no fresh buying interest at the higher side. Experts believe that the next rally can only be expected after the index closes above the 21 EMA level every week.

On the options front, 25,200 puts witnessed heavy open interest addition at 125.5 lakh contracts, holding the highest open interest, indicating crucial support for the NIFTY50 for today's expiry. On the upside, the 25,500 continued to hold the highest open interest, indicating strong resistance for today’s expiry.

Options strategy

Traders who expect significant move on the either side for today’s expiry can execute a long strangle strategy by buying 25,200 CE and 25,250 PE. The trade is expected to turn profitable beyond the breakeven levels of 25,125 on the downside and 25,326 on the upside.

Bullish outlook

Traders with bullish sentiment can execute a long call strategy by buying 25,200 calls. The strategy would turn profitable after the index moves above 25,257.

Bearish outlook

Traders with a bearish outlook can execute a long put strategy by buying a put strike of 25,250. The strategy would turn profitable after the index moves below the 25,181 level.